The safe-havens rally continues amid escalating tensions in Ukraine
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The safe-havens rally continues amid escalating tensions in Ukraine

European markets are set to open lower amid non-stop headlines about the Ukraine crisis as investors' mindset has shifted to safe-haven assets. Overnight, risk sentiment deteriorated due to escalating tensions between the West and Russia. In Eastern Ukraine, Russian troops were sent to separatist-controlled areas, and new sanctions are likely to be imposed by the US in response to this.

Assets perceived to be safe havens have rallied as a result. US Treasuries yields continue to drop by approximately 7-8 basis points as bond prices surge for a second week. Yields on short-term bonds fell by 2.56% to 1.77%. Ten-year bond yields reached 1.86%, down 3.26%. 30-year bond yields dropped by 5 basis points to %2.20. Given the risks to growth from geopolitical tensions, the Fed will likely recalculate its tightening plans.

Brent is on the rise amid supply concerns

Brent crude has climbed about 3.5% to $97 per barrel, and the 100 mark is now on the horizon. Oil prices jumped more than $2 on Tuesday on supply disruption worries as tensions between Russia and Ukraine escalated after Moscow ordered troops into two breakaway regions in eastern Ukraine.

JPY outperforms USD

 Risk aversion has pushed gold above $1900. On Tuesday morning, gold is challenging the 1913 barrier. Accelerating upside momentum may lead towards 1917 and 1920.

The JPY and CHF have strengthened as safe-haven currencies. USD/JPY extends losses below the 114.77 crucial support, triggering a bearish signal. Prevailing negative momentum can send the price towards 114.462 and 114.00.

Events of today

On the data front, investors are waiting for IFO Germany, which rates the current German business climate and measures expectations for the next six months. The index is expected to continue increasing from 95.7 to 96.5 in February.

The US CB Consumer Confidence is also monitored by investors, as it can serve as a leading indicator of consumer spending. Consumer confidence has been declining in the last two months due to rising inflation, and it is likely to continue falling from 113.8 in January to 110 in February. The reading in December was 115.8. It will be accompanied by Markit's Flash Manufacturing/Services PMIs. House prices will also be in the spotlight following the release of the FHFA's House Price Index. We will end the day with the Richmond Fed Manufacturing Index.