The Long and Short of it, week ending 18 Feb 2022

Publication Type: Market Commentaries

A high-volatility week with U.S. stock markets pushed and pulled by Russia-Ukraine-U.S. tensions and
all but ignoring inflation and Fed monetary policy concerns. All three major stock indexes fell by 1.5%
or more last week with daily moves of ¾ percent or more occurring 3 times for each index. U.S. stock
prices continued their move lower Monday following the previous Friday’s sell off spurred by a White
House announcement that Russia’s invasion of Ukraine was imminent. Markets reversed course
Tuesday, moving higher on Russian reports of troop withdrawal from Ukraine’s border and growing
hopes of de-escalation of tensions (and were mostly unchanged Wednesday following the release of
FOMC minutes). Those hopes were dashed Thursday as NATO rebuffed Russian claims of troop
withdrawal and as the White House again warned a Russian invasion of Ukraine was imminent
causing all three major indexes to move sharply lower over Thursday and Friday. 10-year U.S.
Treasury rates mirrored stock markets, rising 13bps through Tuesday with increasing hopes of
Russian de-escalation and then falling 12bps the remainder of the week as those hopes faded. At
week’s end, the S&P 500 fell 1.6% to 4,348,87, the Nasdaq Composite Index dropped 1.8% to
13,548.07, the Dow Jones Industrial Average lost 1.9% falling to 34,079.12, the 10-year U.S. Treasury
rate increased 1bp to 1.93% and the U.S. dollar (as measured by the ICE U.S. Dollar index - DXY) was
practically unchanged.

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The Long and Short of it, week ending 18 Feb 2022

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