Futures Slide As Ukraine War Refuses To Go Away, 10 Year Yield Tumbles To February Lows

Tyler Durden's picture

After months of ignoring events in Ukraine, HFT algos suddenly, if one for the time being, have re-discovered just where the former USSR country is on the map, and together with the latest economic disappointment out of China in the form of its official manufacturing PMI which missed expectations for the sixth month in a row, futures are oddly non-green at this moment now that talk of a Ukraine civil war is the new black (after two months of ignoring the elephant in the room... or rather bear in the room). Lighter volumes, courtesy of holidays in Japan and UK, have not helped the market breadth and stocks in Europe are broadly lower with the DAX (-1.33%) and CAC (-1.19%) weighed upon by risk off sentiment and market positioning for the eagerly anticipated ECB policy meeting especially after the EU cuts its Euro-Area 2014 inflation forecast from 1.0% to 0.8%. But what's bad for stocks continues to be good for equities, and moments ago the 10Y dropped to a paltry 2.57%, the lowest since February... and continuing to maul treasury shorts left and right.

Market focus is squarely pointed ahead to the key risk events of the week, including the BoE and ECB rate decisions with various PMIs scattered through the week.

Bulletin overnight highlights from Bloomberg and SocGen

  • With Ukraine on an offensive to uproot insurgents from its eastern industrial region, dozens were killed in Odessa on May 2 after Russia sympathizers seeking to escape clashes took refuge in a building later engulfed by fire
  • Ukraine’s presidential election, planned for May 25, is driving another rift between Russia, the EU and the U.S. as Putin’s government questions the legitimacy of the vote
  • Nikkei closed; 10y bunds down 2bps at 1.449%
  • Treasuries post slight gains as long bond leads an extension of Friday’s reversal amid escalating violence in Ukraine; markets waiting Yellen remarks Wednesday, start of quarterly refunding auctions tomorrow.
  • China’s manufacturing contracted for a fourth month in April, according to HSBC/Markit purchasing manager’s index
  • Australia March building approvals decline 3.5% mom (vs cons +1.5% mom)
  • Portugal decides on ‘clean exit’ from bailout, without precautionary credit line; PM Passos Coelho says decision backed by European partners; nation has reserves for one year which provides protection against any external volatility
  • Indonesia’s economy expands 5.21% yoy in Q1 2014 falling short of consensus expectations of 5.60%
  • The European Commission trimmed its economic growth forecast for the euro area and predicted low inflation to remain a threat to expansion for at least the next two years
  • Draghi has designed two-step ECB monetary strategy, El Pais reported, citing unidentified people in Frankfurt; may cut rates to 0.15%, go to a negative deposit rate; if prices do not pick up, ECB will study QE program as a second step
  • Gary Becker, the University of Chicago economist who won a Nobel Prize for applying economic methods to shed light on sociological topics such as crime, education and marriage, has died. He was 83.
  • Sovereign yields mostly lower. Asian stocks little changed. European equity markets fall (U.K. closed for holiday), U.S.  stock futures decline. WTI crude,
  • gold and copper gain

US Event Calendar

  • 9:45am: Markit US Services PMI, April final, est. 54.5 (prior  54.2)
  • Markit US Composite PMI, April final (prior 54.9)
  • 10:00am: ISM Non-Manufacturing, April., est. 54 (prior 53.1)
  • 11:00am POMO: Fed to purchase $2.25b-$2.75b in 2021-2024 sector 11:00am: U.S. announces plans for 4W bill auction

EU & UK Headlines

Cautious sentiment over the weekend, on the back of Ukraine escalation, ECB sources and the UK market closure today coupled with the EU cutting Euro-Area 2014 inflation forecast to 0.8% from 1.0% has weighed heavily on European stocks. and benefited safe have assets across the board.

In spite of the cautious sentiment, Bunds are little changed, with short end peripheral bond yield spreads tighter after El Pais reported over the weekend citing sources that the ECB may act in June if inflation does not pick up and EUR stays strong. The sources added the ECB may cut interest rates to 0.15%, put deposit rate in negative territory and if prices do not pick up, the ECB would study asset purchases as a second step although only after the AQR in autumn.

US Headlines

Fed’s Fisher (voter, hawk) said the Fed will likely bring their bond-buying program to an end in October and only after that will they consider raising rates.


With little in the way of earnings, and relatively light news flow given the UK closure, The DAX (-1.33 %) and CAC (-1.19%) are weighed upon by several Co.'s going ex-div. and general cautions sentiment based on Ukraine. With M&A news marginal today, notable stories concern Siemens, with some members on the Co.'s supervisory board opposing their Alstom bid and AstraZeneca, with Pfizer said it would lobby Astra shareholders to force the Co. into talks by warning it would not increase its GBP 50/shr offer.


Weekend press reports which indicated that the ECB may act in June if inflation does not pick up and EUR stays strong failed to weigh on EUR, which instead benefited from fears of more sanctions on Russia companies. This, combined with light volumes amid the market holiday in the UK meant that heading into the North American cross over, both EUR/USD and GBP/USD are seen little changed. At the same time, flight to quality trades weighed on USD/JPY, which trades close to mid-April levels.


Brent and WTI futures have both been in positive territory today as tensions in Ukraine continue to flare and conflict in South Sudan disrupts oil production. Libyan production also seeing disruptions as further protests on a connecting pipeline halts the El Sharara oil field despite protests in the area ceasing. A light week ahead in terms of US data with only ISM Non-Manufacturing Composite due out today at 1500BST.

Over the weekend it was reported that Ukraine government troops renew offensive in Slovyansk, Eastern Ukraine, with Ukraine troops in heavy fighting in Slovyansk. Over the weekend Ukrainian Police said that 31 people had been killed in a violent confrontation between pro-Russian and pro-Kiev protesters as a trade union building was set ablaze.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
GetZeeGold's picture



Trouble........what trouble?


We are riders on the storm......all life could be extinguished on the planet....and we'll be at new record highs.

mvsjcl's picture

Why do we call it a civil war, when it's actually a proxy war?

Ghordius's picture

a lot of civil wars are at the same time proxy wars. even abstaining in helping one side or the other is a form of participation

Arius's picture

let just say, NOW they choose as the excuse to whatever they are doing Ukraine ... dahhh ... might as well say, i did not get up from the right side of the bed ... doenst matter really ... they are going to do what they do best STEAL YOUR MONEY

in fairness it is their casino... you come and play at your own risk... i wonder about those Wall street afficianatos will they ever learn??? i guess not...


In other news, people trying to get OFF the grid ...

Barry Rosenstein, the hedge fund manager of Jana Partners, is paying $147 million for a house well not exactly and house but a property ...

Headbanger's picture

Wars don't just go away if the MSM ignores them and wants us to worry about finding flight 370 instead!!??

Moar diversions should do it!

I know!  How about a nice big false flag event here at home!?

That should make that non-war in Ukraine go away for sure.

Pure Evil's picture

Either that, or someone in the NBA, NFL, or NHL could say something racist about Mexican Food on Cinco De Mayo which could provide another distraction for the next two weeks.

pelican's picture

Who the fuck cares?  I will still need to get up and go to work to pay for DC, NYC and the umemployed masses.



Pure Evil's picture

Your contributions are greatly appreciated.

Now STFU and get to work slave.

BandGap's picture

Interesting when the threshold energy allows facile interconversion.


Going to be an interesting week, perhaps requiring a clever change of attitude.

Ghordius's picture

no, not much. plenty of examples of civil wars where the biggest conflict was among the "bystanders"'s participation, or not

in the Spanish Civil War, the UK, France, Russia, Germany and Italy were all continuosly pushing for less participation by the others

at that time the Soviet Union thought it would have a trump card: "maskirovka", i.e. about having socialist/internationalist private volunteers joining the Republican cause from all the world

this time... by the mercy of St. George, protector of both factions in this conflict, it's again maskirovka, though this time pitting nationalists against other nationalists and the liberal/internationalist support they are getting

may this month of May go without too much bloodshed. the air is pregnant with the scent of spring, the man and boys involved there are easily intoxicated by that. If May passes without too much hostility, there is a chance for a peaceful end to this conflict

intric8's picture

"may this month of May go without too much bloodshed. the air is pregnant with the scent of spring, the man and boys involved there are easily intoxicated by that. If May passes without too much hostility, there is a chance for a peaceful end to this conflict"

...while ukrainian chicks prepare more molotovs to burn peaceful russian protesters alive

Why cant they breakout a different kind of coctail, settle their differences and let a drunken revelry ensue? Lets hope your right ghordo

TideFighter's picture

We all know these "down" days are just playing out the fascade as we go past 17,000 before the mid-term elections. 

Eyeroller's picture

After all, you've gotta have some down days in order to BTFD.

Mabussur's picture



I wish the bitch market would croke already so Vladimir can go and stop this insanity in Ukraine.

GetZeeGold's picture



Lots of KGB around here all of a sudden.


Have you guys met our Obamacare trolls?

nmewn's picture

"Lots of KGB around here all of a sudden."

ROTFL!!!...you noticed that too huh.

Mabussur's picture



That is a lot of supputations on very few words.

My contention is that the evil empire is waiting for the bear to make a move in Ukraine in order to usher the mother of all false flags and pin the resulting economic collapse on the Russkies. Living in western Europe, I have seen my country go down the drain under the influence of the USA as early as WWI. The USA is now sacrificing my country further on the altar of the petrodollar. Having understood that, I am more than willing to try a russian boot on my throat for a change. Can't be much worse.

If that makes me a KGB troll, so be it.

The other possibility is that you are an ignorant forum trigger happy cunt that will extrapolate on any comment in order to make a sterile quick joke instead of asking for additional information and  displaying your stupidity all over ZH, bringing nothing to the reflexion.

What is more likely ?

In short, go fuck yourself, dimwit.

GetZeeGold's picture



I have seen my country go down the drain under the influence of the USA as early as WWI.


Any comment on the 11 million Ukraines Russia starved?


Mabussur's picture

Yes, sir.

USA had values at some point in time. Values that were worth dying for. Where are those today ? If it works downhill, who are you to judge that the Russians are not going up that very same hill ? The earlier everyone realises that the high (as low as it might be currently) ground is not held by the USA and cronies (by a looooooong shot), the earlier people will stop buying into the full fldge propaganda assault that the USA medias (and by extension all the NATO countries) is carrying on Russia and his leadership. BO is fucking me with rock salt and i do not like it. Seems to me that VP has more manners and at least would kiss me before humping my bony arse dry.

GetZeeGold's picture



What about those 11 million again?

Mabussur's picture

You missed the point that i was trying to make.

That point is : things do change.

How many people has the USA and proxies killed since Stalin ? Including its own citizens through soft kill methods, Drone attacks, chemical atatcks in Vietnam, usage of depleted uranium ammo in Irak ....

A case of the pot calling the kettle black.

I swear, some people should go back to DWTS and superbowl games. USA #1, USA #1, USA #1

Pure Evil's picture

Does a "trigger happy cunt" smell a little fishy with a tinge of cordite?

Ghordius's picture

insinuating that you are KGB is pure trolling. as such, I would advise not to answer. yet since you did:


- the USA has a legitimate interest in keeping up their system... as all the others, too

- having seen and compared the various boots on the throats, I can't advise to try the Russian one. the Russian vision of empire is with Russia on top

- we always had and we will always have empires, since the Neolithic Age. nations break a bit this pattern... just to confirm it again in alliances

- the trick about empires is quality, not quantity. for example quality of political participation, or quality of life. yet when empires are struggling in conflict, it becomes more a quantity game. so the trick is about conflict management

- sterile quick jokes are a feature of ZH. either this, or a sterile debate between "vetted" fewer participants

GetZeeGold's picture



insinuating that you are KGB is pure trolling


The placement of my post was somewhat unfortunate....oh well.

Edward1290's picture

too many Israeli firsters on this forum.........

Quinvarius's picture

I know who thinks they are going to put a boot on my throat where I live.  I will assist them in pulling back a stump anywhere and everywhere. 

BandGap's picture

You want to burn the forest for the trees.

How about we save the good things about the US and cull the rest?

nmewn's picture

I'm still trying to figure out why he is "more than willing to try a russian boot on my throat for a change."

Gonna have to assume (because he does not say) he's in the baltic somewhere and not France or Spain for obvious geographical reasons.

Which starts a peeling of the onion for the rest of his comment ;-)

BandGap's picture

His comments are inconsequencial since they will sway no one here. Just more lines for defining where everyone stands. Time is running out for words.

Funny, ran into someone from Bulgaria this past week who now is working towards US citizenship. Interesting to see this country through their eyes.

The vocal minority in this country is really going to suffer when the field flips. Lots of "independents" springing up where there used to be democrats. Smart people are either bailing out or changing colors. I don't play the political game, but it sure is interesting to watch.

Ghordius's picture

I'm curious, too. Yet he wrote Western Europe and no one from our new eastern EU peers would not recognize that the Warsaw Pact was anything else than a Russian boot on the throat. though of course the new generations coming online are already forgetting. from the nick, I'd say French

nmewn's picture

Yes, he did write western europe didn't he...so apparently he's fine with ole Vlad rolling his armor across europe right on through the arc de triomphe.

Fascinating ;-)

Mabussur's picture

Russia has never had an expansionist policy. The Varsaw Pact lines were agreed upon at Yalta.

Well if the US can have 190 bases around the world to promote "democracy" and perform "humanitarian actions", I would not mind the assistance of some russian tanks to tell em to go shove it up their collective arses. US is toxic beyond imagination. It is a case of least worse for me. If skin cream brand A is giving you a bloody infected rash, would you keep using it or give brand B a try ?

BTW the end game in Ukraine is dominion over europe through the control of the NG supply. Either the russians win and its game over for the US in europe or the US win and there is going to be a nice pipeline going through Ukraine, Turkey Syria, all the way to Qatar.

nmewn's picture

"Russia has never had an expansiionist policy. The Varsaw Pact lines were agreed upon at Yalta."

lol...no Czechoslovakian invasion in 1968 then, no invasion of Hungary in 1956, really?

As far as pipelines, the country is already criss crossed by pipelines. Personally, as far as I'm concerned its a european problem brought about by their own energy stupidity.

Maybe they can attach solar panels to their ornate palaces, that should pacify the Greens ;-)


Eyeroller's picture

Pfizer just beat earnings by 2 cents.  Forget about Ukraine!  The sheeple will latch on to the Pfizer news, continue to ignore Ukraine, and buy, buy, buy.

realWhiteNight123129's picture

The true TSY shorts are long gone, they are disciplined and took profits. They will come back at 2.25% on the TSY.


OC Sure's picture

I agree. We covered in December and it is not time yet to short again...

OC Sure's picture

"...continuing to maul treasury shorts left and right."

The Bond move is genuine and not propelled by shorts covering.

Open Interest has been expanding as prices rise.


Bernoulli's picture

what's bad for stocks continues to be good for equities

--> Funny typo (?) but that's exactly the point, isn't it?


25or6to4's picture

I'm sure if Dow is down today it will be passed off by MSM as "a little bit of profit taking". Remember tomorrow IS Tuesday .

Boston's picture

Here's a fun fact:


US 10yr is yielding ~2.57%

Spain 10 yr is yielding ~2.98%


So only FORTY bp spread !?  Like there's nothing wrong with that....nope....everything is just hunky-dory now!

lolmao500's picture

Ukraine gov. believes that Russia will invade on the 9th or the 11th. They even said they might invade TODAY in a few hours.

Bullshit or not, they have started fortifying Kiev... not that it would make a difference...

Dr. Engali's picture

The Ukraine war "refuses to go away" because the U.S. wants it that way. The collapsing empire must have it's boogie man.

BandGap's picture

The US was looking for a place to happen, making stops along the way.

Was Syria a distraction, or did Putin really avoid a war there? Time will tell. If anything it was a gauge on how far Russia would push things.........

JustObserving's picture

The New York Times promulgating Pentagon propaganda as usual on Ukraine:

The US media, led by the so-called “newspaper of record,” the New York Times, shares political responsibility, having brazenly promulgated government propaganda and lies since the Ukraine crisis began last November. The Times, in particular, both in nominal “news” stories and in columns by State Department mouthpieces such as Andrew Higgens, C.J. Chivers, Roger Cohen, Nicolas Kristof and Thomas Friedman, has promoted the line that the insipient civil war in Ukraine is the result of Russian aggression, not US-European subversion.

In order to promote this grossly distorted version of events, the Times has gone so far as to publish an article with fabricated “evidence” and doctored photos supposedly proving that the rebellion in southeast Ukraine is the work of Russian military and intelligence forces—a story the newspaper was forced to retract—and dismissed as Russian propaganda warnings about the fascist and anti-Semitic politics of Washington’s ultra-right allies in Kiev. Chivers has also penned on-the-spot reports on the right-wing Maidan protests in Kiev sympathetically painting the ultra-nationalist paramilitaries as honest patriots and obscuring their fascist politics and pedigree.

Thus it is not surprising that the Times responded to the fascist murder of 38 people in Odessa on Friday by burying the story and deliberately obscuring the identity of the perpetrators. The only mention of the torching of the Trade Unions House and murder of 38 people holed up inside occurred in a story on page A7 of the Saturday edition of the newspaper—on the fourth page of the International section.


Zadig's picture

The NYT is a despicable tabloid. 

valley chick's picture

POMO!  All is well....../sarc

Quinvarius's picture

Goldman Sachs said this war went away a month ago.  A guess some little kid in a cube farm is not very good at predicting world or economic events based on obvious facts and trends.  Why do they let children act as their mouthpiece?

AdvancingTime's picture

The implications on the Euro-zone economy could be massive. If things get rough across the globe expect eyes return to Europe, where they continue to talk. I have not written much about the Euro-zone economy as of late because nothing is really happening.

The Euro-zone is engaged in a talkathon, with fear of an immediate collapse off the table the members of the Euro-zone much like their political counterparts in America just talk about solutions without any action. Below is an article updating what is not happening in Europe.