For its part, The CBOE volatility index, considered the index of fear on Wall Street, fell to 3.7%, at 18.90 points, its lowest level since mid-January.
What happened this Tuesday is that Russia promised to reduce military operations around kyiv and in northern Ukraine, while Ukraine proposed to adopt a neutral status. The market saw the first sign of progress toward peace in several weeks.
On the other hand, oil and other commodity prices fell, helping to calm concerns about rising inflation and the path of the Federal Reserve’s monetary policywhich began raising interest rates to combat rising prices.
“If you look at the month into this war, the market priced in a lot more bad news than good,” said Art Hogan, chief market strategist at National Securities in New York.
The S&P 500 that knew how to fall in a correction, is now down less than 3% so far this year.
Still, there were signs of nervousness in the market over the possibility of the Fed making a monetary policy mistake leading to a slowdown, or possibly a recession, after the spread between US 2- and 10-Treasury bonds years was reversed for the first time since September 2019.
“While I think the end result of an aggressive Fed tightening cycle is a recession, I don’t expect it to happen quickly. Historically speaking, all recessions are preceded by curve inversions by 2-10 years, but not all investments end up in recessions,” said Ellis Phifer, managing director of fixed income research at Raymond James.
Source: Ambito
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