STATE OF THE MARKETS

Stocks paused rally as yields ticked higher. US stocks closed lower on Tuesday after Fed’s Governor Chris Waller comments of aggressive rate hikes sent yields higher. Small cap Russell (-1.26%) fell the most, followed by Dow (-0.67%), S&P (-0.63%) and Nasdaq (-0.41%) as the 10Y benchmark hit 2.87% and the Dollar index rebounded above the 102 handle.

In the commodities market, crude spiked to above $118.60/bl before settling lower around $114/bl after news of OPEC’s plan to suspend Russia participation in oil production. Dollar strength sent the non-interest bearing gold lower to $1835/oz while China reopening spurs demand for iron ore which climbed higher to $133.50/tn.

In the FX space, medium to long term accounts seemed to favor the commodity currencies as Loonie and Aussie reign in demand while Swiss and Euro were sent to offers. Short term traders seemed quick to bid the oversold Dollar alongside Loonie and Aussie to take advantage of the demand.

On Wednesday, markets are expected to remain cautious while looking forward to earning reports from GameStop (GME), Hewlett Packard Enterprise (HPE), Chewy (CHWY), American Superconductor (AMSC), PVH Corp (PVH) and VersaBank  (VBNK) as well as the latest figures in US mortgage applications, manufacturing index and jobs openings. The EIA petroleum status report will be in the spotlight for energy traders.