US stocks edged lower on Monday amid geopolitical tensions in the US. The S&P 500 posted its third consecutive decline, while the tech-heavy Nasdaq 100 closed near its opening price. Bond yields, on the other hand, rose amid gains in shorter maturities. That move led to the flattening of the curve, with the gap between two- and ten-year interest rates narrowing.

Ukrainian President Volodymyr Zelensky briefly spooked the markets with his statement that his office later said was sarcastic. It was about the escalating tensions in the West, which, if avoided, could prompt a short rally, said George Ball, chairman of Sanders Morris Harris

Investors were also on edge as bets on the pace of rate hikes after the Fed's January meeting shifted to six or seven this year. Strategists at JPMorgan, led by Marko Kolanovic, said global markets are already taking into account potential aggressive waves of monetary tightening this year.

St. Louis Fed President James Bullard said on Monday that the central bank needs to move ahead with the plan on raising rates in order to highlight their ability to fight inflation. "I do think we need to preload more planned housing removals than we used to," he said.

But Oksana Aronov of JPMorgan said bonds are unlikely to have "a happy ending" if interest rates are raised. She added that "we are in somewhat of a hot mess. We're in the middle of the Fed's last policy mistake and concerned about their next policy mistake. Right now, caution is the name of the game."

Other key events for this week are:

- release of US PPI on Tuesday;

- publication of EIA crude oil inventory report on Wednesday;

- release of FOMC minutes on Wednesday;

- publication of China CPI and PPI on Wednesday;

- speeches of Cleveland Fed President Loretta Mester and St. Louis Fed President James Bullard on Thursday.

- US Monetary Policy Forum on Friday.