Markets Ignore The Fire

Moscow Refinery Burns • Fed Turns Hawkish • Oil Falls Below $80

Good morning from Port of Spain. It’s 6:00 AM here, and a rainy morning is settling in as a weather front moves across the island. Both dogs are stretched out on the couch, snoring loudly enough to compete with the television, while coffee number one is doing its best to get the day started.

Markets are waking up to a very different tone than the one investors saw yesterday afternoon.

The Federal Reserve left interest rates unchanged, which was widely expected. What caught investors’ attention was the Fed’s signal that multiple rate hikes could still be on the table during the second half of the year if inflation proves stubborn. Markets initially sold off on the news as traders adjusted expectations for the path of policy.

This morning, however, futures are pointing higher. S&P futures are up nearly 1%, Nasdaq futures are leading the rebound, and Treasury yields remain elevated with the 10-year Treasury sitting around 4.46%.

Overnight, Ukraine once again struck a Russian refinery, continuing what has become a remarkably consistent campaign against Russian energy infrastructure. The latest attack targeted the Moscow refinery and reportedly caused significant damage. At this point, refinery strikes have become frequent enough that markets appear almost desensitized to the headlines.

That may explain why crude oil continues to trade below $80 a barrel despite another attack on energy infrastructure. Markets often reveal their true priorities through price action. If traders believed a major supply disruption was developing, oil would likely be telling a very different story.

For now, the story appears straightforward: investors are looking past the geopolitical noise and focusing on growth, earnings, and the Fed’s next move.

The rain is falling, the dogs are still asleep, and the opening bell is a few hours away.

We’ll see what the market decides to care about today.