Just a few short days after the ostensible deescalation in Ukraine following Thursday's Geneva talks, violence broke out over the weekend with a shootout between pro-Russia activists and unidentified gunmen.  Russia quickly denounced the incident as a blatant disregard for the recent truce, blaming Ukraine.  Ukraine quickly denied involvement, saying the gunmen were Russian special forces, essentially 'firing on their own' with the intent of blaming Ukraine.

To whatever extent the rest of the world perceives such events as increasing the odds of civil war and additional foreign involvement, global markets will continue to feel the effects.  This was the case last week as escalating tensions on the 15th helped bond markets reach their strongest recent levels while apparent progress in Geneva on Thursday made for a significant move in the other direction.

The geopolitical events will be all the more visible this week as the calendar is fairly light.  Monday has no market moving reports scheduled and Tuesday only adds Existing Home Sales at 10am.  That leaves the first two days of the week plenty of room to focus on Ukraine-related headlines.  Bond markets also have plenty of room to react--sitting as they are in the central part of their longer-term range.

Economic data and events pick up a bit on Wednesday with New Home Sales in the morning and a relatively important 5yr Treasury auction in the afternoon.  Thursday's morning data is respectable as well, with Durable Goods and Jobless Claims both at 8:30am.  This instance of Claims will be covering the same week as the survey that's used to determine the upcoming NFP numbers two weeks from now.  Friday wraps up with Consumer Sentiment at 9:55am, which hasn't been having much of an effect of late.

Throughout the week, the potential for geopolitical risk to trump anything on the economic calendar remains a valid consideration.