The market looks at Ukraine and shrugs
If the situation in Crimea/Ukraine has the world on edge, markets don't seem all that worried. Key indicators of the market's perception of systemic risk and the economy's health have hardly budged, and point to continued, albeit relatively sluggish, growth.
The Euro is up a bit so far this year, but as the chart above shows, it has been strengthening since mid-2012, when it first became clear that the Eurozone sovereign debt crisis was receding and the Eurozone economy was emerging from its recession. A stronger Euro is a good sign that the outlook for the Eurozone continues to improve.
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The picture and commentary that grabbed my attention:
Gold prices are up about $100/oz. so far this year, but as the chart above shows, that is in the nature of a minor blip on the geopolitical risk radar screen. On the margin over the past few weeks, gold prices and TIPS prices are down, which suggests the market has actually become less worried about an end-of-the-world scenario developing. I hasten to add, however, the gold prices are still quite high from a long-term historical perspective, and the real yields on TIPS are still quite low. Both tell me that markets are still willing to pay a substantial premium for the ultimate safety of gold and the default-free inflation protection of TIPS. There is still a good deal of risk aversion out there, but on the margin it is declining....MORE
