US stocks rallied after Russia-Ukraine talks brought hope that a potential de-escalation is nearing. Initially, risk appetite roared higher after Russia negotiator Medinsky said Russia will ‘drastically, cardinally’ cut military activity near Kyiv and Chernihiv. Progress in talks was not widely expected so Wall Street delivered a strong reaction. Stocks gave back some of the gains after Medinsky clarified that a de-escalation around Kyiv and Chernihiv does not mean a ceasefire.
Stocks will have a bumpy road even if a major de-escalation occurs as inflation pressures will linger into next year. It looks like Wall Street thinks the economy is still on solid footing even after the 2s10s curve inverted for the first time since 2019. The countdown for a recession starts, but growth should still be strong at the very least for the next few quarters. The inversion didn’t last long but that was somewhat to be expected given how optimistic large parts of Wall Street remain.
Bitcoin runs out of steam
Bitcoin bulls ran out of steam after hitting overbought territory. Even today’s risk-on session on Wall Street after progress was made with Russia-Ukraine talks, Bitcoin couldn’t muster up a rally. It looks like Bitcoin is going to consolidate here and could be vulnerable to profit-taking towards the USD 45,000 level.
The long-term bull case for Bitcoin is still in place, but exhaustion in the recent runup is settling in.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Ed Moya