Weekly Focus – Fed is accelerating

As the crisis in Ukraine temporarily subsided, markets began to turn their attention to other issues, particularly monetary policy.. Despite Russia’s demand for gas rubles, volatile oil prices rose again to USD / bbl 120, positive risk increases and stocks remained stable. For the first time since 2018, roll production has risen by more than 0.5% and 10Y US Treasury products are now selling for around 2.4%. EU leaders have agreed to buy more common gas in the future, despite restrictions on Russian energy imports from Germany. G7 leaders agree to control Russia’s ability to sell its gold reserves, and the United States has announced additional sanctions against more than 400 Russian individuals and companies.

Norges Bank (NB) gradually continued to strengthen its policy And this week’s rates are up by another 25 BP, but we think the NB rate is too harsh and the lead will be higher than in a few walks and earlier policy rates. Speed, March 24)

In contrast, the federation’s new mantra seems to be “reaching neutrality as soon as possible.” And this week, several FOMC members spoke about the acceleration of front loading, at this point no one is blocking 50bp. With inflation still high and the federation behind the curve, we see the potential for a faster increase than we put it in pencil (i.e., in May and June or 75 BP at 50 BP at the same time). Strict monetary policy (and financial conditions) and commodity prices will add to the risk of a global economic downturn in the next 1-2 years, reflecting a persistent US trade deficit.

In Research Russia – EU ban on Russian energy could be a game changerOn March 23, we took a closer look at the economic implications of the Ukraine war on Russia. Russia’s “fortified Russia” policies have already severely limited family living standards, and the war will continue to weaken for years to come. On the positive side, PMI figures for March suggest that the effects of the Ukraine war on the eurozone could be less than feared, easing fears of a rapid economic downturn. As a result, future production prospects are further clouded as growth in manufacturing and services slows down and new supply disruptions, weakening of export orders and rising supply costs increase.

With the development of the Ukraine war focused on signs of Russia’s progress, next week the central banks will have more information to assess the labor market and inflation. The US Labor Market March report is due Friday and we are looking for a good report of employment growth of around 450k. In the euro area, March HICP figures have been released and high input costs are still operating in the price chain, so we expect headline inflation and headline inflation (up 6.5% and 3.0%, respectively). Putting a lot of pressure on the ECB to regulate policy. Following the recent Covenant-19 epidemic, property sector tensions and rising commodity prices, some negative concerns for China’s PMI were released on Thursday.


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