S&P 500 Tests Support While Oil Tests Resistance Ahead of Chair Powell Testimony
One thing Mr. Putin attempted to do was protect the Russia’s trade and currency by divesting away from the U.S. dollar and stockpiling other country currencies. However, the sanctions, particularly those around SWIFT , which helps facilitate payments in other countries, are blocking Russia from its ability to trade and raise capital. Additionally, many Russian assets have been frozen by western allies.
Other petroleum products also rose on the news including RBOB gasoline futures, which shot up 6.38% on Tuesday. These gasoline futures have risen 60% from their December low. Additionally, natural gas futures rose more than 4%, while heating oil futures gained 8.72%. Rising oil prices booted the energy sector, which was the only one to finish the trading session in the green.
Finally, many investors are moving into precious metals as a safe haven. Gold futures rallied 2.44% on Tuesday, while silver futures rallied 4.84%. Even copper futures, which are usually seen more as an indication of economic strength than a safe haven, rallied 2.56%. The Gold & Silver Index saw precious metal companies rise an aggregated 4.59%.Speaking of safe havens, investors flocked into U.S. Treasury bonds, particularly in longer-term maturities like the 20- and 30-year bonds.
On a slightly positive note, the yield curve ratio did steepen a little on Tuesday. The 2s10s spread has moved recently moved down to 0.4 from about 0.8 at the first of the year. A ratio of 0.0 is a completely flat curve, and a negative ratio is an inverted curve and often a harbinger of a recession. Investors are now wrestling with the risk of economic slowdown caused by the war and rising inflation and commodity prices.