Market Wrap: St. Louis Fed Pres. Calls for Quicker Rate Hikes and US Closes Kyiv Embassy

The St. Louis Fed president calls for faster rate hikes

James Bullard, the president of the St. Louis Federal Reserve, called for a more rapid approach to interest rate hikes Monday, proposing a 100 basis point increase by July 1.

Bullard noted that the Fed's "credibility was on the line" and that the last few months indicate that inflation is showing no signs of slowing.

"It was really October, November, December, January that called into question any idea that this inflation was naturally going to moderate in any reasonable time frame without the Fed taking action," said Bullard.

US Embassy in Ukraine relocated

More uncertainty was added to the market when Secretary of State Antony Blinken announced the US Embassy in Ukraine would be relocated hundreds of miles away to Lviv, a city on the Polish border.

“We are in the process of temporarily relocating our Embassy operations in Ukraine from our Embassy in Kyiv to Lviv due to the dramatic acceleration in the buildup of Russian forces,” Blinken said in a statement Monday.

The market has been dancing on impending rate hikes for some time. The added pressure from a potential conflict between Ukraine, Russia and NATO nations has only added more stress to an already uncertain market.

The S&P 500 continued its fall and dropped by as much as 1.16% during the day. It ended the day down just 0.38% after a slow climb back. The Nasdaq and Dow followed a similar pattern of volatility during the day but closed only slightly down or neutral. Crypto, which has maintained a degree of correlation to equities, remained largely flat through the day with bitcoin dropping around 0.6% intraday but ending the day up 0.77%.

[stock_market_widget type="accordion" template="chart" color="#5B35D5" assets="^GSPC,^IXIC,^DJI" start_expanded="true" display_currency_symbol="false" api="yf" chart_range="1mo" chart_interval="1d"]

[stock_market_widget type="accordion" template="chart" color="#5B35D5" assets="BTC-USD,ETH-USD" start_expanded="false" display_currency_symbol="true" api="yf" chart_range="1mo" chart_interval="1d"]

Top stories

Story: UK Tax Watchdog Seizes NFTs in $1.9M Fraud Investigation

• Her Majesty’s Revenue and Customs has not taken control of the three NFTs, but is instead preventing them from being sold via court order, according to Sky News
• Three people have been arrested on suspicion of attempting to defraud the UK authority

Story: Crypto Lender BlockFi To Pay $100M in Fines to US Regulators

• The penalties extend from the SEC’s review of BlockFi’s high-interest yield account last year
• The lender is prohibited from offering US citizens any new products that resemble its high-interest yield account while it seeks to register a similar compliant product

Story: Cardano, Polkadot ETPs Hit Frankfurt Stock Exchange

• Valour CEO says firm is “only at the beginning” of bringing crypto products to regulated exchanges
• Launches come amid a spree of altcoin ETP launches from competing companies 21Shares and CoinShares

Story: Animoca Brands and Brinc To Invest up to $30M in Play-to-Earn Ecosystem

• A Guild Accelerator Program will provide up to $500,000 for each early-stage startup selected
• Crypto-focused gaming grew exponentially over the last 12 months, and market players expect it to continue this year and further crypto adoption

Going forward

The likelihood of steep rate hikes seems to be getting higher and higher as inflation continues upwards. This alone could result in a volatile period in the markets. Should the tension between Russia and Ukraine amount to anything serious, the markets are in for a very bumpy ride.

---

Get the news in your inbox. Explore Blockworks newsletters:

• Blockworks Daily: Unpacking crypto and the markets.
• Empire: Crypto news and analysis to start your day.
• Forward Guidance: The intersection of crypto, macro and policy.
• 0xResearch: Alpha directly in your inbox.
• Lightspeed: All things Solana.
• The Drop: Apps, games, memes and more.
• Supply Shock: Bitcoin, bitcoin, bitcoin.