Stocks rally as Russia-Ukraine talks advance, 2s10s curve briefly inverted, bitcoin exhaustion

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

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya