Week in Review: March 4, 2022

Global equity markets ended the week lower as investors remained fixated on developments surrounding Russia’s invasion of Ukraine. Investor demand for safe-haven assets drove positive fixed income returns, as yields measured by the 10-Year Treasury fell 0.24% to end the week at 1.73%. As a reminder, bond prices and yields move inversely of one another. Commodities saw strong returns as investors continued to assess the impacts of recently enacted, as well as proposed, sanctions on Russian energy supplies.

Initial expectations following Russia’s invasion of Ukraine were that they would quickly overthrow the Ukrainian government and effectively seize control of the country. However, in the face of fierce resistance, Russia’s military advances have slowed, leading to the realization that the current fighting is unlikely to end soon. While markets are unlikely to react to every twist and turn in the fighting as they did in the hours and days immediately following the invasion, major events such as the fall of large cities, successful talks between the two sides, or other unexpected developments, such as the threat to Ukraine’s nuclear reactors, will continue to influence the markets. In addition, markets will be watching closely to determine the effects of recently enacted sanctions on Russia’s economy as well as any ripple effects on the broader global economy.

Speaking before Congress, Federal Reserve Chair Jay Powell voiced his support for a 0.25% rate hike at the Fed’s March meeting. Before the fighting in Ukraine began, continued strong inflation and employment data had increased expectations that the Fed would raise rates by 0.50% in March. However according to Powell, he wants the Fed to “avoid adding uncertainty to what is already an extraordinarily challenging and uncertain moment.”