The FX Files – “Why Can’t We Be Friends?”

Into the start: Risk assets bounce back on “signs of de-escalation” on the Russia/Ukraine border. Geopolitical risk premiums are reducing in the cross-asset space. North American equity futures are taking the baton from gains in European indices as I type this. Still, this doesn’t feel like the theme is over the long-term. Euro rates are back on the defensive – with 10-year bund yields probing above recent highs. Peripheral spreads are still wide however. Commodities are broadly lower. Prompt WTI/Brent prices are down by ~3% currently. Gold is off by over 1%, while silver is down by over 2%. In FX, the havens are underperforming as you’d expect. Implied vols are SHARPLY lower.