March 23, 2022
“US President Biden is expected to escalate sanctions on Russia today when he attends the G7 summit and meets with NATO partners – having been advised by the White House national security advisor that conflict in Ukraine would ‘not end easily or rapidly’.”
Tim Hallinan – Trading Director
The White House has signalled that the US and its European allies intend to escalate sanctions on Russia this week as it warned the conflict in Ukraine would “not end easily or rapidly”. Joe Biden is set to announce the measures during his visit to Europe, which begins today in Brussels, with the president scheduled to meet NATO partners and attend European Council and G7 summits, according to the top White House national security official. “The president will join our partners in imposing further sanctions on Russia and tightening the existing sanctions to crack down on evasion and ensure robust enforcement,” said Jake Sullivan, US national security adviser. Biden’s trip comes as Russian troop numbers dipped for the first time below 90 per cent of the 150,000 it had amassed on the border of Ukraine before the invasion, a senior US defence official said yesterday. Russian forces are struggling with communication, logistics and fuel, the official added, while some troops have been evacuated after suffering from frost bite because they lacked proper cold weather gear.
Rishi Sunak is planning to set aside a large part of a windfall in UK public finances this year, risking a backlash from Tory MPs who want the chancellor to use all funds available to cushion the cost-of-living crisis hurting British families. The official forecasts in the Spring Statement will show the deficit is at least £20bn better than expected this year, but Sunak will use only some of the money to help households facing soaring gas, electricity, and fuel bills. Sunak will instead highlight the importance of “more resilient public finances” whilst also stating that he will “stand by” families, with a cut in fuel tax expected to be part of new measures he will announce today. UK inflation rose to a fresh 30-year high last month, according to figures, and this will pile pressure on chancellor Rishi Sunak to announce fresh measures to help households with living costs. The Office for National Statistics said the consumer price index rose at an annual rate of 6.2 per cent in February, the highest rate since 1992. The monthly rise of 0.8 per cent between January and February was the fastest since 2009.
Sterling is stronger against the euro and weaker against the dollar this morning. The United States and Britain ended a four-year dispute over US steel and aluminium tariffs yesterday, pledging to work together to counter China in a deal that also removes retaliatory tariffs from US motorcycles, whiskey, and other products. Under the deal, Britain will receive a duty-free import quota of over 500,000 tonnes of steel “melted and poured” in the country annually, with higher volumes subject to the 25% tariff. BP will this week unveil an additional £1bn for new electric car charging points in the UK, one of a number of investments the government hopes to announce alongside its long-awaited infrastructure strategy. Ministers have been working for months on a strategy, expected to be announced on Friday, to ensure the UK has enough charging stations as cars and vans switch to electric. Another 94,524 Covid-19 infections were reported yesterday, with the figure 14 per cent lower that the 109,802 cases reported last Tuesday.
The euro is weaker than most major currencies in the early morning trade. European capitals need to avoid competing for bilateral gas deals and instead jointly buy fuel from big suppliers, Belgium’s prime minister urged, as he warned the EU was allowing its economy to be “ruined” by soaring energy prices. Alexander De Croo said the EU should draw on the success of the European Commission’s joint Covid-19 vaccines procurement and make a combined effort to secure large quantities of gas, as it seeks to curb prices and wean itself off Russian fossil fuels. Russia is increasingly relying on unguided bombs and brute force in its assault on Ukraine as it seeks to regain momentum and runs out of more precise weaponry, according to western defence officials. Moscow’s dependence on heavy artillery barrages of urban centres and its use of so-called dumb bombs indicated a shift in military tactics following its failure to capture big cities or make major advances on other fronts.
The dollar is well bid against most major currencies overnight. US President Joe Biden is reportedly preparing to sanction hundreds of Russian lawmakers, including most of Russia’s State Duma, its lower house of parliament, on Thursday, just as he jets off to Europe to meet with NATO leaders. Biden will announce the new sanctions on 300 members of Russian parliament on Thursday from Brussels, where he will meet with allies from NATO to plot their next steps to address the war in Ukraine, officials told the Wall Street Journal. Meanwhile, the president’s public approval rating fell to a new low of 40% this week, a clear warning sign for his Democratic Party as it seeks to retain control of Congress in the November 8th election. About one-in-three COVID-19 cases in the United States are now caused by the BA.2 Omicron sub-variant of the coronavirus, whilst overall infections are still declining from January’s record highs. However, US infectious disease official Dr. Anthony Fauci said in a statement that he does not expect a major surge.
Global equity markets climbed today, with investors expanding their search for hedges, as the Federal Reserve’s strengthened resolve to clamp down on inflation drove bonds toward record losses. An MSCI Inc. gauge of Asia Pacific shares rose for a second day, with Japan stocks at their highest since January. Chinese tech stocks extended a rally, as share buybacks by Xiaomi Corp. and Alibaba Group Holding Ltd. stirred hopes that their peers may follow suit. US futures edged higher after the S&P 500 advanced for the fifth session in six. The index has now recovered halfway from the rout that started in January. European contracts also advanced. Short-term US government bonds sank toward their worst quarterly performance in almost four decades, and yields surged to highs unseen since mid-2019. Oil rose on the prospect of new sanctions on Russia over its invasion of Ukraine and as US crude inventories declined. The yen sank to a six-year low, while a gauge of the dollar was steady.
Main Economic Data/Central Banks/Government (All Times CET)
6:30 a.m.: Netherlands March Consumer Confidence Index, Jan. Consumer Spending
8:00 a.m.: UK Feb. CPI; Retail Price Index
8:30 a.m.: Hungary 4Q Current Account
9:15 a.m.: Riksbank’s Breman speaks
10:00 a.m.: Poland March Consumer confidence; Feb. Unemployment Rate
10:30 a.m.: UK Jan. House Price Index
1:00 p.m.: BOE’s Bailey speaks
1:00 p.m.: ECB’s Nagel speaks
1:30 pm.: UK Chancellor Sunak’s Spring Statement
3:30 p.m.: EIA weekly report on US oil inventories
4:00 p.m.: Euro-Area March Consumer Confidence
4:30 p.m.: ECB’s Visco speaks
5:00 p.m.: Russia Feb. Industrial Production; PPI; CPI Weekly
Earnings include Sofina
US premarket includes General Mills