FX.co ★ The Ukrainian-Russian conflict, day 55. The battle for Donbas has begun

The key indices of the US stock market - Dow Jones, NASDAQ, and S&P 500 - ended Monday with a new, albeit small, fall. In principle, nothing is happening on the US stock market right now that could surprise traders. Key stock indices are falling, and shares of companies such as Tesla, Microsoft, and Apple are falling. Investors cannot ignore the fact that by the end of the year, the Fed's key rate may be 2.5%, which will significantly increase the yield on bank deposits and treasury bonds. Thus, the shares of many companies will begin to show weaker returns in comparison with deposits and bonds. Consequently, there must be a flow of capital from the stock market to the debt market, from the cryptocurrency market to the debt market, and the real sector. Of course, the key moment for the American economy right now is inflation. With an inflation rate of 8.5%, whatever assets you own, they are still unprofitable in fact, since inflation is now several times higher than the yield of treasury bonds, stocks, and deposits. That is, in fact, right now buying any of the above securities, you will incur losses. Cryptocurrencies could protect against inflation, but they were already unprotected last year, now most experts, including us, believe that the "bullish" trend is over. Moreover, the increase in the Fed's key rate is precisely aimed at reducing inflation. Thus, we can still hope that it will begin to slow down and approach the profitability of the above-mentioned instruments.

Meanwhile, the so-called "battle for Donbas" has begun in Ukraine. Fierce fighting has been going on in eastern Ukraine for several days. According to military experts, it is the result of this battle that will answer the question of who will win in this confrontation. Recall that Russia is under the most serious sanctions among all countries of the world, overtaking even the DPRK and Iran in this indicator. And the sanctions probably won't be lifted in the coming years. Thus, it makes no sense for the Kremlin to stop the special operation, all the negative consequences for the economy have been collected. If Russian troops manage to occupy significant territories on the Left Bank of Ukraine, it can be considered a victory. It should be understood that military operations cannot be conducted continuously. Martial law has not been introduced in Russia, under which the whole country, all citizens must work exclusively "for the front." In Russia, a special operation has been announced, which does not allow for general mobilization.

Also, do not forget that continuous flows of weapons (as well as finance and humanitarian aid) are sent to Ukraine from many regions of the world, so the longer the confrontation lasts, the more incomprehensible its outcome.