U.S. stocks declined on Tuesday ahead of FOMC meeting today as investors grapple not just with whether the central bank will make a 75-basis point rate increase or lift rates by 100 points, but also how high the Fed Reserve signal rates will go in the future. Subsequently, Dow Jones declined 1% to finish at 30,706.23, S&P 500 declined 1.1% to finish at 3,855.93 while Nasdaq 100 declined 1% to finish at 11,425.05. The 10-year yield Treasury advanced 5 basis points to 3.538% its highest level in more than a decade. Gold spot price declined $6.60 to $1,671.60 per ounce while WTI crude oil declined $1.16 to $84.20 per barrel.
Russian President Putin called a “partial mobilization” and pledged to annex territories that are occupied by Russian forces in a major escalation of invasion to Ukraine. Russian Defense Minister Sergei Shoigu commented in a television interview that as many as 300,000 troops would be called up, comprised mainly of the reservists with some military experience. The additional troops would be more than the 180,00 that Russia had amassed at Ukraine’s borders before February 24 invasion. Ukraine, which declared mobilization early in the war, now has around 700,000 in the field. In the meantime, referendums in eastern and southern Ukraine in Russia’s occupied territories are set to take place as soon as this weekend. Treasuries, gold, and the dollar led gains in haven assets after Putin’s announcement on mobilization. Russian stocks tumbled to lowest since invasion post the news with IMOEX losing as much as 9.6%. IMOEX currently trades 1.62% down on the day at 2,179, while RTSI trades at 1,032, down 10.58% on the day. Energy companies Gazprom, Lukoil, Rosneft and Novatek led the losses along with Sberbank. Russian equities were the world’s worst performers again today after sliding on Tuesday. Russian ruble showed a relatively muted reaction to the events remaining mostly flat. USDRUB was up 0.46% at 61.06, while EURRUB lost 0.19% to 60.41. Russian bonds sold off following the news with 10-year benchmark local ruble bond yields jumping to 10.63%.
SSA opens weaker heading into the FOMC decision at the end of the session. GHANA (-.50) continues weaker after local debt restructuring plans moved bonds down 1.50pts; on the positive side, the country’s Q2 GDP rose 4.8% YoY against an expected 2.7% uptick. The rest of the space is similarly weaker with an early tilt upwards on Monday failing to be sustained.