Breaking: In a nod to Russia, Ukraine is reportedly no longer insisting on NATO membership - AFP

In a nod to Russia, Ukraine is reportedly no longer insisting on NATO membership, reported AFP on Tuesday. France24 also subsequently reported a similar headline, though was referring to an interview conducted on Monday. Ukraine's aspirations to join NATO was a key reason why Russian President Vladimir Putin ordered an invasion of the country. Whether or not an offer not to join NATO meets Russia's conditions that Ukraine be "neutral" (after all, Ukraine still aspires to join the EU) is not yet clear. 

To clarify, Russia's stated goals when it announced its "special military operation" (invasion) of Ukraine was to "demilitarise" and de-Nazify" the country. Russia's demands for Ukraine to meet if it wants a ceasefire to include a pledge to be "neutral". Given the damage already dealt to the Russian military as a result of the conflict and to the Russian economy by Western sanctions, strategists have argued that the incentive for the Russians to agree to a ceasefire is diminished.

A pledge not to join NATO might not be enough. Russia may want to see a puppet pro-Kremlin government installed and aspirations to join the EU dropped, as well as agreements to "demilitarisation" conditions fulfilled before agreeing to a ceasefire. Ukrainian President Volodymyr Zelensky has made it clear that such conditions are not acceptable.

Market Reaction

The latest headlines of Ukraine dropping demands to join NATO triggered a bout of risk-on as traders revise higher their expectations that there could be a ceasefire. Commodity prices like gold and oil pulled back a little while US equities and yields popped higher. In FX markets, the US dollar and other havens have been sustaining some losses.