MNI EUROPEAN OPEN: Sanctions, Sanctions & More Sanctions

EXECUTIVE SUMMARY

• RUSSIA HIT WITH CENTRAL BANK SANCTIONS AND PARTIAL WITHDRAWAL FROM SWIFT
• RUSSIA BANS FOREIGN SELLING OF RUSSIAN ASSETS & SHORTENS TRADING HOURS ON MONDAY
• THE WEST HITS PUTIN & LAVROV WITH SANCTIONS
• PUTIN ORDERS MILITARY COMMAND TO PUT NUCLEAR DETERRENT FORCES ON HIGH ALERT (SKY)
• UKRAINE AGREES TO TALKS WITH RUSSIA BUT FIGHTING STILL RAGES (NEW YORK TIMES)

Fig. 1: CME RUB/USD Futures (continuation)

Source: MNI - Market News/Bloomberg

UK

POLICY: Boris Johnson’s government has shelved a strategic plan to create a British rival to Silicon Valley around Oxford and Cambridge in order to prioritise “levelling up” spending in the north of England. The “Oxford-Cambridge Arc”, a regional project designed to connect the UK’s two leading universities and the manufacturing and logistics centre of Milton Keynes by building east-west transport links, was a key priority of successive Conservative governments, until last year. Individuals with detailed knowledge of the plans across Whitehall, industry and local government have told the Financial Times that the project is no longer considered a priority by ministers. (FT)

FISCAL: Ministers are sounding out industry views on an online sales tax designed to boost England’s struggling high streets and shopping malls by funding a reduction in business rates. A three-month consultation into the new levy will look at issues such as which products and services could be targeted and whether it would be a flat rate per transactions or per delivery, or a revenue-based tax. “We want to see thriving high streets and a fair economy as we move forward from the pandemic,” said Lucy Frazer, financial secretary to the Treasury. (FT)

POLITICS: The Tories’ support has dropped to 2005 levels in the wake of the scandal over Downing Street parties. Boris Johnson and half the cabinet would be on course to lose their seats if an election were held now, according to a poll. The Conservatives would lose 164 seats, leaving them with 201, only three more than when they were led by Michael Howard. The MRP model projection, which maps polling results onto every seat in the country, puts Labour on 352 seats, a gain of 150, with an overall majority of 14 for Sir Keir Starmer’s party. (The Times)

POLITICS: The north of England will be the principal battleground in the next general election, according to research that also concluded there is no evidence of a southern “blue wall” ready to fall. The study by the Onward thinktank suggested that Labour could regain 31 seats in the north, Midlands and north Wales if 2019 Conservative voters switched back to their preferred party, but only three southern seats would change hands. The analysis found that 60% of battleground seats at the next election will be in northern England compared with 20% in the south and the Conservatives have a chance to gain ground in most of these seats. (Guardian)

EUROPE

ECB: European Central Bank policymakers remain open to accelerating their exit from bond buys even as the war in Ukraine raises uncertainty, and their biggest debate may be whether to put a firm end-date on the stimulus scheme, sources told Reuters. With inflation pressures building faster than expected, the ECB had been all but certain to signal the end of bond purchases at its March 10 meeting. But the war in Ukraine has thrown those plans into turmoil, prompting policymakers to reassess the outlook. Six sources close to the discussion say that a faster exit is still necessary as inflation could be around double the ECB's 2% target this year, with even medium term inflation at risk of overshooting. "Inflation is higher and broader. And it's no longer just energy, but food prices, too," one of the sources, who asked not to be named, told Reuters. "It would be inappropriate not to act on this." (RTRS)

ECB: European Central Bank Governing Council member Pierre Wunsch agrees with market expectations about the timing of the bank’s tightening of monetary policy, De Tijd reported, citing an interview. Wunsch said he agrees with the expectation that the ECB will halt bond purchases in the third quarter and raise interest rates at the end of this year or early in 2023, according to De Tijd. The Belgian central bank governor said he disagreed with the idea that tightening by the ECB would cripple the economic recovery, as monetary policy remains “extremely accommodating.” Big swings in energy prices will make inflation more volatile in the future, which should prompt central banks to accept that price increases at times may deviate from their targets for longer, or they risk becoming too activist in setting monetary policy, De Tijd cited Wunsch as saying. While there’s uncertainty about the end point of the tightening cycle, Wunsch said very low interest rates have little impact on the economy because cheap money doesn’t make a lot of difference to private-sector investment decisions. (BBG)

GERMANY: Germany is committing 100 billion euros ($112.7 billion) to a fund for its armed services and will ramp up its defense spending above 2% of its gross domestic product, Chancellor Olaf Scholz said during a special session of the Bundestag on Sunday. It has become clear that “we need to invest significantly more in the security of our country, in order to protect our freedom and our democracy,” Scholz said. Germany has been widely criticized for what many describe as meager investment in its military and its slow and lackluster response to Russia’s military buildup around, and subsequent invasion of, Ukraine. The announcement Sunday followed the German government’s decision Saturday to send weapons and other supplies directly to Ukraine. (CNBC)

ENERGY: Energy ministers from European Union countries will on Monday discuss preparations for potential energy supply shocks and measures to shore up gas stocks following Russia's invasion of Ukraine. (RTRS)

ENERGY: The European Union is reaching a consensus on measures to prevent the Russia-Ukraine crisis from pushing record electricity costs even higher, Spanish Economy Minister Nadia Calvino said on Friday. Spain delivered this week a new series of recommendations for the European Commission to decouple natural gas from electricity costs in its price-setting mechanism as a way to bring down costs. “My impression is that the awareness that had been growing about the importance of addressing this issue is now unanimous,” Calvino said in a press briefing on the sidelines of a meeting of European finance ministers in Paris. “The European Commission is willing to adopt a new package of measures.” The measures proposed by Spain include introducing a price cap to electricity generated from natural gas that would work as an “emergency break” to reduce the exposure of electricity bills to the volatility of international gas markets. (BBG)

ENERGY: Germany pledged new support for liquefied natural gas terminals, the latest sign it’s willing to retool its energy policy in the wake of Russia’s invasion of Ukraine. Just days after shelving an $11 billion pipeline project to bring Russian gas to Europe, Chancellor Olaf Scholz said Germany would move “quickly” to build two LNG terminals. So far proposed projects have been left to the private sector alone, and are facing headwinds without government support. (BBG)

ENERGY: Italy has issued an early gas market warning notice given the high level of risk to Russian gas supplies via Ukraine, saying it was preparing "exceptional" measures to incentivize storage injections. (Platts)

U.S.

FED: Federal Reserve Bank of St. Louis President James Bullard continues to back raising interest rates by 1 percentage point by July 1 and sees little impact on the U.S. outlook from Russia’s invasion of Ukraine. “The direct linkages to the U.S. economy are minimal so I wouldn’t expect that much impact directly on the U.S. economy,” Bullard said Friday during an interview with SiriusXM Business radio. “Of course, we will have to watch this very carefully and see what happens in days ahead.” (BBG)

FED: The Trimmed Mean PCE inflation rate over the 12 months ending in January was 3.5 percent. According to the BEA, the overall PCE inflation rate was 6.1 percent on a 12-month basis, and the inflation rate for PCE excluding food and energy was 5.2 percent on a 12-month basis. The tables below present data on the Trimmed Mean PCE inflation rate and, for comparison, overall PCE inflation and the inflation rate for PCE excluding food and energy. The tables give annualized one-month, six-month and 12-month inflation rates. (BBG)

POLITICS: President Joe Biden’s approval rating fell to a record low in a new Washington Post-ABC News poll, with 37% saying they approve of the job he is doing and 55% saying they disapprove ahead of his first State of the Union address on Tuesday. When asked which party they would prefer control Congress, 50% said they would rather have Republicans in charge compared with 40% favoring Democrats. regard to how they would vote in House elections if races were held today, 49% of registered voters say they would prefer the Republican candidate while 42% said they would vote for the Democratic candidate. (BBG)

OTHER

GLOBAL TRADE: Top chipmakers in Taiwan and South Korea are closely reviewing their stockpiles of critical industrial gases after Russia's invasion of Ukraine sparked fears of supply disruption that could exacerbate a global chip shortage. (Nikkei)

JAPAN: The approval rating for Japanese Prime Minister Fumio Kishida’s cabinet fell 4 ppts to 55% in a poll conducted by Nikkei from Feb. 25 to 27, the lowest since the premier took office in Oct. Disapproval rating at 31%. 61% supported tougher sanctions on Russia in line with the U.S. and Europe; 30% said Japan should “conduct its own diplomacy”. 77% expressed concern the international community failing to stop Russia’s invasion of Ukraine could lead to China using force on Taiwan; 11% said they have no such worries. Nikkei received valid responses from 992 people surveyed by phone; valid response rate 44.2%. (BBG)

BOJ: MNI INSIGHT: Japan Factory Output Latest Dismal Sign On Q1 GDP

• Downside risks to the economy will be heightened at the March Bank of Japan policy meeting amid the latest tepid economic data and geopolitical risks driving up energy costs that could lead the central bank to issue a rare statement before the end of the fiscal year on maintaining financial market stability, MNI understands - on MNI Policy MainWire now, for more details please contact sales@marketnews.com.

RBA: The war in Ukraine could slow the pace of rate hikes as stagflationary pressures emerge writes John Kehoe. Former RBA board member Warwick McKibbin said the higher energy prices were occurring at a “problematic” time when global inflation was already high, particularly in the United States and expects the RBA and other central banks to treat the higher energy prices as a temporary supply shock. “I was expecting the RBA to raise rates several times between now and the end of the year if Ukraine hadn’t happened, but I think the RBA will now sit on their hands longer than they otherwise would have,” Mr McKibbin said. (AFR)

AUSTRALIA: Australian Prime Minister Scott Morrison has failed to improve his government’s polling despite a fierce two-week campaign on national security, in which he accused the opposition Labor Party of being too weak on China. With less than three months to go before an election due by May, Morrison’s center-right Liberal National coalition is trailing the opposition Labor Party 45% to 55% in a new Newspoll survey published by The Australian newspaper on Sunday night. (BBG)

RBNZ: New Zealand--Higher oil prices as a result of Russia's invasion of Ukraine will add to inflation in the near term and require a judgment on whether more policy tightening is needed, Reserve Bank of New Zealand Deputy Governor Christian Hawkesby said Monday. "There's no doubt that it is going to add to near-term volatility that we see in the CPI inflation," he said in an interview with The Wall Street Journal. "And then the judgment for us is does that mean there is more work for us to do to keep inflation expectations anchored. So that's the decision ahead of us." (Dow Jones)

RBNZ: New Zealand’s central bank is aware of the risks of raising interest rates in aggressive, half percentage-point steps, chief economist and Monetary Policy Committee member Yuong Ha said. “If you were to go harder earlier, you potentially risk creating volatility because people go, well, hang on, does that mean you’re likely to take it even further, are you going to do more 50-point hikes on the way?” Ha said in a telephone interview Monday in Wellington. “We are always as a committee judging what’s the desired stance for policy and then what are the tactical, strategic considerations about how to best achieve that.” (BBG)

RBNZ: The Reserve Bank of New Zealand (RBNZ) has more work to do on interest rates to control inflation and it is too early as yet to assess what impact, if any, the Russian invasion of Ukraine might have on policy, a top official said on Monday. In an interview with Reuters, RBNZ Chief Economist Yuong Ha said New Zealand's trade links with Russia and Ukraine were minor but there could be some impact through market volatility and commodity prices. Ha said policy had to move to a contractionary stance to fight inflation and rate rises of 50 basis points were a possibility if necessary. The central bank last week hiked rates by 25 basis points to 1.0% and projected they could peak around 3.35% by the end of next year. (RTRS)

NEW ZEALAND: Prime Minister Jacinda Ardern says there will be no more self-isolation for fully-vaccinated travellers returning to New Zealand from March 3. All unvaccinated travellers will still need to complete a period in MIQ, the PM said. (NZ Herald)

NORTH KOREA: North Korea said it held an “important” test for a reconnaissance satellite over the weekend, in its first launch of a ballistic missile since late January. Its official Korean Central News Agency said Monday the launch that took place a day earlier helped confirm the characteristics and working accuracy of a high definition photographing system, data transmission system and attitude control devices. North Korea’s space program is seen as having a dual-use application for bolstering its ballistic missiles for the military. South Korea’s military said its neighbor to the north fired what appeared to be a single ballistic missile at 7:52 a.m. on Sunday from an area near Pyongyang’s main airport toward waters off its east coast. It reached an apogee of about 620 kilometers (385 miles) and had a range of about 300 km. (BBG)

RUSSIA: President Volodymyr Zelensky of Ukraine agreed on Sunday to talks with Russia “without preconditions,” even as President Vladimir V. Putin escalated tensions by placing his nuclear forces on alert. Mr. Zelensky said that he would send a delegation to meet with Russian officials near the border with Belarus, at a still undetermined time, but that he would remain in Kyiv, with his top officials. “I do not really believe in the outcome of this meeting,” he said, “but let them try to make sure that no citizen of Ukraine has any doubt that I, as a president, have not tried to stop the war.” (NYT)

RUSSIA: Stubborn Ukrainian resistance and logistic difficulties are hampering Russian attacks more than Moscow planners expected, and there’s no indication the invading forces have managed to take any big Ukrainian cities, according to U.S. and U.K. officials.“Russian forces are not making the progress they had planned. They are suffering from logistical challenges and strong Ukrainian resistance,” the U.K.’s Ministry of Defence said on its verified Twitter account. Ukrainian troops, assisted by volunteers, successfully repulsed an assault by Russian units on Kyiv in the early morning hours Saturday local time. Fighting has been reported in and around several Ukrainian cities. The British report corroborates information shared with CNBC by a U.S. Department of Defense official on Friday. “Russian forces are sustaining casualties and a number of Russian troops have been taken prisoner by Ukrainian forces,” the U.K. ministry added. That same U.S. Defense official, speaking on the condition of anonymity on Saturday in Washington, said the Pentagon has no indication so far that the Russian military has taken control of any Ukrainian cities. The situation in Ukraine is fluid, and individual military accounts are difficult or impossible to verify. (CNBC)

RUSSIA: The general staff of Ukraine's armed forces described Sunday as "a difficult time" for the military, saying Russian troops "continue shelling in almost all directions". In an English-language post on Facebook, the general staff said defence force members in the Vasylkiv military air base south west of Kyiv were resisting artillery strikes and Russian attacks. (RTRS)

RUSSIA: Belarus is preparing to send soldiers into Ukraine in support of the Russian invasion in a deployment that could begin as soon as Monday, a U.S. administration official said Sunday evening. "It's very clear Minsk is now an extension of the Kremlin," said the official, who spoke on the condition of anonymity to discuss a sensitive security development. (Washington Post)

RUSSIA: Satellite imagery taken on Sunday showed a large deployment of Russian ground forces including tanks moving in the direction of the Ukrainian capital Kyiv from approximately 40 miles (64 km) away, a private U.S. company said. The images released by Maxar Technologies Inc showed a deployment comprised of hundreds of military vehicles and extending more than 3.25 miles (5 km), Maxar said. The convey was situated northeast of the Ukrainian city of Ivankiv and contained fuel, logistics and armored vehicles including tanks, infantry fighting vehicles and self-propelled artillery, it said. (RTRS)

RUSSIA: Ukraine has full control over Ukraine's northeastern city of Kharkiv, the regional governor said on his social media on Sunday. "Control over Kharkiv is completely ours! The armed forces, the police, and the defense forces are working, and the city is being completely cleansed of the enemy," Oleh Sinegubov wrote on Telegram. (RTRS)

RUSSIA: Two Ukrainian facilities containing nuclear waste suffered damage amid Russia’s now four-day-old invasion, international monitors reported on Sunday. Missiles hit a radioactive waste-disposal site in Kyiv, and an electrical transformer was damaged in a similar depot in Kharkiv, according to an email from the International Atomic Energy Agency. Inspectors are still awaiting radiation measurements from local authorities to determine the extent of the damage. (BBG)

RUSSIA: Saying it’s not clear whether Putin has designs on territory beyond Ukraine, Pentagon spokesman John Kirby told reporters Friday, “We are going to defend every inch of NATO territory.” He said U.S. military units already placed on alert will mobilize as needed by NATO after the alliance’s rapid-response force was activated on Friday. The Defense Department has put about 10,000 to 12,000 troops on prepare-to-deploy orders, Kirby said. (BBG)

RUSSIA: More than 400 Russian mercenaries are operating in Kyiv with orders from the Kremlin to assassinate President Zelensky and his government and prepare the ground for Moscow to take control, The Times has learnt. The Wagner Group, a private militia run by one of President Putin’s closest allies and operating as an arm-length branch of the state, flew in mercenaries from Africa five weeks ago on a mission to decapitate Zelensky’s government in return for a handsome financial bonus. (The Times)

RUSSIA: Ukraine is "one of us and we want them in the European Union", Ursula von der Leyen has told Euronews. The interview came after Brussels announced it was sending weapons to Ukraine, banning Russian-backed media in the EU and prohibiting Russian aircraft from the bloc. But despite backing Ukraine for EU membership, she gave no indication it would be the rapid accession demanded by President Volodymyr Zelenskyy on Saturday. She told Euronews: "We have a process with Ukraine that is, for example, integrating the Ukrainian market into the single market. "We have very close cooperation on the energy grid, for example.(Euronews)

RUSSIA: Vladimir Putin has ordered that Russia's nuclear deterrent forces are put on high alert. Mr Putin said aggressive statements by NATO leaders and economic sanctions against Moscow were behind the decision. Speaking on state television on Sunday, he said: "As you can see, not only do Western countries take unfriendly measures against our country in the economic dimension - illegitimate sanctions that everyone knows about. "But also the highest-ranking officials of leading NATO countries are allowing themselves to make aggressive statements in relation to our country. (Sky)

RUSSIA: Putin’s move to put Russia’s strategic nuclear forces on higher alert is an “escalatory” step that increases the risk of a miscalculation, the Pentagon said. The comment, during a briefing by a senior U.S. defense official, came after Putin on Sunday cited what he called “aggressive” statements from the leaders of NATO countries. The official declined to say whether the U.S. had changed its nuclear readiness posture in response to the Russian move. (BBG)

RUSSIA: A referendum in Belarus on Sunday approved a new constitution ditching the country's non-nuclear status at a time when the former Soviet republic has become a launch pad for Russian troops invading Ukraine, Russian news agencies said. The agencies cited the Belarus central elections commission as saying 65.2% of those who took part voted in favor. The result came as little surprise, given the tightly controlled rule of President Alexander Lukashenko. The new constitution could see nuclear weapons on Belarusian soil for the first time since the country gave them up after the fall of the Soviet Union. (RTRS)

RUSSIA: Russia will decide in which areas it will work with the West and where it no longer makes sense to cooperate, the RIA news agency cited senior lawmaker Andrei Klimov as saying on Saturday. (RTRS)

RUSSIA: Moscow sees attempts to draw Finland and Sweden into NATO, particularly those being made by the US, Russian Foreign Ministry Spokeswoman Maria Zakharova said at a briefing on Friday. "We are viewing the course taken by Finland’s leadership to continue the policy of military non-alignment as an important factor of ensuring security in northern Europe, in the European continent in general, yet at the same time we cannot but notice persistent attempts by NATO and some member states of the alliance, above all, by the United States of America, to draw Finland, as well as Sweden, into the alliance," she said. She added that "practical interaction" of Helsinki and Stockholm with NATO is growing, this has been observed for a while. "NATO drills were also held there, these countries provided the territory for such maneuvers by this military bloc, this was conducted near Russian borders, including the imitation of attacks by American forces with the use of nuclear weapons against the so-called comparable adversary," the diplomat said. In relation to this, the spokeswoman stated that both Finland and Sweden as OSCE members confirmed the principle of the indivisibility of security. "The choice of ways to ensure national defense and security is an internal and sovereign affair of any state, that said, all OSCE member countries in their national capacity, including Finland and Sweden, confirmed the principle, according to which the security of some states should not be built at the expense of the security of other countries," she concluded. (TASS)

RUSSIA: NATO is deploying thousands of land, air and sea troops from its rapid-response force for the first time in defense of alliance members amid Russia’s assault on Ukraine. Some of the 40,000-strong force, which has previously only been used for humanitarian missions, will be sent to NATO’s eastern members “to protect all allies and every inch of NATO territory,” NATO Secretary General Jens Stoltenberg told reporters Friday. Stoltenberg also said the alliance would provide more military support, including for air defense systems, to Ukraine, but that “it’s hard to predict what are our possibilities in the future.” (BBG)

RUSSIA: Germany on Saturday reversed a historic policy of never sending weapons to conflict zones, saying the Russian invasion of Ukraine was an epochal moment that imperiled the entire post-World War II order across Europe. The decision was an abrupt change in course, coming after Berlin clung to its initial position for weeks despite the rising Russian menace and pressure from EU and NATO allies. On Saturday, Berlin finally bowed to that pressure, and to the reality that Russia is encircling Ukrainian cities and threatening to topple the government in Kyiv. (POLITICO)

RUSSIA: Russia's special military operation in Ukraine has seized a large quantity of weapons supplied by Western countries in recent months, said Defense Ministry Spokesman Igor Konashenkov on Friday. The seized weapons include the U.S. Javelin anti-tank missile systems and British NLAWs, the spokesman said. (Xinhua)

RUSSIA: Ukraine has filed a suit against Russia at the U.N.'s highest court, rejecting Moscow's claim it invaded its neighbour to prevent genocide and asking judges to order an immediate halt to Russian military operations. Russian President Vladimir Putin has asserted that Ukraine committed genocide in the Donbass region of eastern Ukraine and said the invasion was therefore justified to end it. In a filing at the International Court of Justice (ICJ) in the Hague in which it dismissed the genocide allegation, Ukraine asked judges to order so-called "provisional measures" to protect Ukraine. The ICJ confirmed the filing on Sunday. (RTRS)

RUSSIA: China, India and the UAE abstained from voting on a UN Security Council resolution condemning Russia’s illegal invasion of Ukraine, in another sign of the widening of the diplomatic split between the West and the East over Vladimir Putin’s aggression. Moscow, which has a permanent seat on the Security Council, vetoed the resolution demanding that the Kremlin stop its attack on Kyiv and withdraw all its troops. (Daily Mail)

RUSSIA: China attempted to distance itself from Russia as the scale of the invasion becomes clear, with Foreign Minister Wang Yi on Friday saying it was “absolutely imperative” for all sides to exercise restraint to prevent the conflict from “getting out of control.” “China has been following the evolution of the Ukraine issue, and the present situation is something China does not want to see,” Wang Yi said in phone calls with top diplomats from the U.K., France and the European Union, according to a readout from the official Xinhua News Agency. (BBG)

RUSSIA: China so far does not appear to be helping Russia evade Western financial sanctions on Moscow over its invasion of Ukraine, but doing so would "do profound damage" to China's reputation, a senior Biden Administration official said on Saturday. (RTRS)

RUSSIA: The U.S., European allies and Canada agreed Saturday to remove key Russian banks from the interbank messaging system, SWIFT, an extraordinary step that will sever the country from much of the global financial system. “This will ensure that these banks are disconnected from the international financial system and harm their ability to operate globally,” the global powers wrote in a joint statement announcing the significant retaliatory measure. Moscow’s exclusion from SWIFT, which stands for the Society for Worldwide Interbank Financial Telecommunication, means Russian banks won’t be able to communicate securely with banks beyond its borders. Iran was removed from SWIFT in 2014 following developments to Tehran’s nuclear program. SWIFT is an independent enterprise based in Belgium that serves as an internal messaging system between more than 11,000 banks and financial institutions in over 200 countries and territories. “Any decision to impose sanctions on countries or individual entities rests solely with the competent government bodies and applicable legislators,” SWIFT said in a statement. “Being incorporated under Belgian law, our obligation is to comply with related EU and Belgian regulation.” The group said it’s seeking details on the entities the new effort will impact. After the announcement, Ukrainian Prime Minister Denys Shmyhal welcomed the measure, writing in a tweet, “Appreciate your support and real help in this dark time. Ukrainian people will never forget this! Keep holding the line! We are on our land.” In addition, the U.S. and its allies announced that they will impose restrictive measures aimed at preventing Russia’s central bank from deploying its international reserves in ways that may undermine sanctions. “This will show that Russia’s supposed sanctions proofing of its economy is a myth. The $600 billion-plus war chest of Russia’s foreign reserves is only powerful if Putin can use it,” a senior administration official said on a call with reporters Saturday evening. (CNBC)

RUSSIA: Bank of Russia announces decision as part of additional measures to support Russian banks following announcement of sanctions. Until end of this year, Bank of Russia allows lenders to not take into account worsening financial position of borrowers if deterioration is related to sanctions and happened after Feb. 18. Central bank also recommends that lenders try to restructure debt to companies affected by sanctions, without worsening repayment terms. (BBG)

RUSSIA: Russia's central bank on Sunday said it would resume buying gold on the domestic market from Feb. 28, as it undertakes measures to try and ensure financial stability during Western sanctions against Moscow for its invasion of Ukraine. (RTRS)

RUSSIA: The European Central Bank (ECB) has assessed that Sberbank Europe AG and its two subsidiaries in the banking union, Sberbank d.d. in Croatia and Sberbank banka d.d. in Slovenia, are failing or likely to fail owing to a deterioration of their liquidity situation. The Austrian parent bank Sberbank Europe AG is fully owned by Public Joint-Stock Company Sberbank of Russia, whose majority shareholder is the Russian Federation (50% plus one voting share). The ECB took the decision after determining that, in the near future, the bank is likely to be unable to pay its debts or other liabilities as they fall due. Sberbank Europe AG and its subsidiaries experienced significant deposit outflows as a result of the reputational impact of geopolitical tensions. This led to a deterioration of its liquidity position. And there are no available measures with a realistic chance of restoring this position at group level and in each of its subsidiaries within the banking union. (ECB)

RUSSIA: Western nations have ordered personal sanctions on Russian President Vladimir Putin and his Foreign Minister Sergei Lavrov over the invasion of Ukraine. The men's assets in the US, EU, UK and Canada will be frozen and, in the case of the US, a travel ban imposed. (BBC)

RUSSIA: The Treasury Department will impose full blocking sanctions on the Russian Direct Investment Fund, which is intended “to attract capital into the Russian economy in high-growth sectors,” White House press secretary Jen Psaki said in a tweet. The sovereign wealth fund played a role in marketing Russia’s Sputnik coronavirus vaccines. It had previously been sanctioned by the Obama administration over its ties to Vnesheconombank in a tranche of punishments linked to the 2014 annexation of Crimea. The fund has turned away from Western investment so the impact of the new sanctions is expected to be minimal. (BBG)

RUSSIA: US Ambassador to the United Nations Linda Thomas-Greenfield said Sunday that sanctions on Russia’s energy sector are not yet off the table as the US continues to punish the county for its invasion of Ukraine. “We have not taken anything off the table. We're continuing to look at this,” she told CNN’s Dana Bash on “State of the Union” when asked whether such sanctions would put a burden on the US’ economy. (CNN)

RUSSIA: The White House on Friday told Congress that it will need an estimated $6.4 billion in new funding to assist Ukraine as it resists a Russian invasion, to support other eastern European nations dealing with the impact and to bolster the Pentagon. (BBG)

RUSSIA: The European Union on Sunday announced new actions it planned to take in response to Russia’s invasion of Ukraine, including that the union will for the first time fund the delivery of weapons to the besieged nation. The EU will also build on the sanctions it slapped on the Kremlin days earlier, said European Commission President Ursula von der Leyen, by blocking Russian aircraft from flying in EU territory. The 27-member bloc will ban Russian state-owned media outlets Russia Today and Sputnik from its airwaves, as well. “We are developing tools to ban their toxic and harmful disinformation in Europe,” von der Leyen said. In addition, the EU will impose new sanctions on Belarus’ controlling regime led by Alexander Lukashenko, which von der Leyen called “the other aggressor in this war.” (CNBC)

RUSSIA: France on Saturday intercepted a Russian vessel in the English Channel in line with new EU sanctions against Moscow. The cargo ship was transporting cars and left Rouen bound for St. Petersburg. However, French sea police redirected the vessel to the port of Boulogne-sur-Mer in northern France. (BBG)

RUSSIA: The European Union is discussing sanctioning some of Russia’s wealthiest tycoons as well as top officials in state companies and media in a further ratcheting up of its penalties for Moscow’s invasion of Ukraine, according to documents seen by Bloomberg. The list, which still needs to be approved by European governments and could change before that happens, includes a handful of billionaires who haven’t yet been hit by sanctions in the U.S.: metals tycoon Alisher Usmanov, Alfa Group owners Mikhail Fridman and Petr Aven, plus Alexei Mordashov, who controls a major steel company. (BBG)

RUSSIA: The U.K. would support Group of Seven nations setting limits on the amount of Russian oil and gas its members could import “over time,” said Foreign Secretary Liz Truss, in a potential escalation of the impact of the war in Ukraine on energy markets. Russia’s military “is funded by revenues from oil and gas, so what we have to do is reduce dependency on oil and gas,” Truss told Sky News on Sunday. (BBG)

RUSSIA: The UK government is considering restricting Russian ships from using British ports after it emerged that a Russian-owned oil tanker is due to dock in Orkney this week. The NS Champion, operated by Sovcomflot, a large shipping company majority-owned by the Russian state, is due to berth at Flotta oil terminal in Orkney on Tuesday to collect crude oil. To the dismay of politicians and islanders – including Ukrainian residents who attended an anti-war demonstration on Saturday in the archipelago’s largest town, Kirkwall – Orkney Islands council said the UK government had advised that at present the vessel cannot be refused permission to dock. (The Guardian)

RUSSIA: Swiss President Ignazio Cassis said on Sunday that it was "very probable" that neutral Switzerland would follow the European Union (EU) on Monday in sanctioning Russia and freezing Russian assets in the Alpine country. Cassis, interviewed on French-language Swiss public television RTS, said that the seven-member Federal Council would meet on Monday and review recommendations by the departments of finance and economy. Asked whether Switzerland -- a major financial centre and commodities trading hub -- would follow the EU in freezing Russian assets, he said: "It is very probable that the government will decide to do so tomorrow, but I cannot anticipate decisions not yet taken." (RTRS)

RUSSIA: Norway's $1.3 trillion sovereign wealth fund, the world's largest, will divest its Russian assets following Russia's invasion of Ukraine, the Norwegian prime minister said on Sunday. The fund's Russian assets, consisting of shares in some 47 companies as well as government bonds, were worth 25 billion Norwegian crowns ($2.83 billion) at the end of 2021, down from 30 billion crowns a year earlier, the government said. "We have decided to freeze the fund's investments and have begun a process of selling out (of Russia)," Prime Minister Jonas Gahr Stoere told a news conference. (RTRS)

RUSSIA: Japan’s Government Pension Investment Fund, the world’s largest pension fund, held about 50b yen of Russian bonds and 170b yen of stocks as of the end of March. According to the law, the GPIF cannot make investment decisions based on political reasons, said Hiroshi Nagaoka, an official at the fund, adding the fund will continue to monitor the situation in order to act in the best interests of its beneficiaries. (BBG)

RUSSIA: Societe Generale SA and Credit Suisse Group AG halted the finance of commodities trading from Russia as the Ukraine war fueled concerns about the widening impact of sanctions, according to people familiar with the matter. The two banks, key financiers to commodity trade houses, are no longer providing the money needed to move raw materials such as metals and oil from Russia, said the people, who asked not to be named because the information is private. Banks are concerned future sanctions could include energy or a total expulsion of Russia from the SWIFT system of international payments. (BBG)

RUSSIA: Bank of China's Singapore operation has stopped financing deals involving Russian oil and Russian companies, amid concerns of western sanctions following Russia's invasion of Ukraine, said a source on Monday (Feb) with knowledge of the matter. (RTRS)

RUSSIA: At least two of China’s largest state-owned banks are restricting financing for purchases of Russian commodities, underscoring the limits of Beijing’s pledge to maintain economic ties with one of its most important strategic partners in the face of sanctions by the U.S. and its allies. Industrial Commercial Bank of China Ltd.’s offshore units stopped issuing U.S. dollar-denominated letters of credit for purchases of physical Russian commodities ready for export, two people familiar with the matter said. Yuan-denominated letters of credit are still available for some clients, subject to approvals from senior executives, the people said, asking not to be identified discussing private information. (BBG)

RUSSIA: BP is abandoning its stake in Russian oil giant Rosneft in an abrupt and costly end to three decades of operating in the energy-rich country, marking the most significant move yet by a Western company in response to Moscow's invasion of Ukraine. (RTRS)

RUSSIA: The NSW government will dump $75 million worth of Russian assets from a state investment fund to protest against President Vladimir Putin’s brutal invasion of Ukraine. Treasurer Matt Kean said NSW will sell all holdings of Russian assets from its NSW Generations Fund, acknowledging the plight of Ukraine and the Russian people protesting the violence. (SMH)

RUSSIA: The global computer chip industry, including the giant Taiwan Semiconductor Manufacturing Company, has begun halting sales to Russia in the wake of U.S. sanctions aimed at punishing Moscow’s invasion of Ukraine. (Washington Post)

RUSSIA: U.S. citizens should consider leaving Russia immediately on commercial flights, the State Department said on Sunday, citing an increasing number of airlines canceling flights and countries closing their airspace to Russia after its invasion of Ukraine. "U.S. citizens should consider departing Russia immediately via commercial options still available," said a security alert dated Feb. 27 on the web site of U.S. embassy in Moscow. It has asked U.S. citizens to have "a contingency plan that does not rely on U.S. government assistance." (RTRS)

RUSSIA: All French citizens on short-term visits to Russia should leave the country immediately, the French government said on Sunday, citing tightening restrictions on air travel resulting from sanctions punishing Moscow for invading Ukraine. "Due to the increasing restrictions on air traffic between Russia and Europe, it is strongly recommended that French nationals visiting Russia make arrangements to leave the country without delay using existing air links," the French Foreign Ministry said. (RTRS)

RUSSIA: Moscow Exchange will open forex and money market trading at 10:00 Moscow time on Monday, three hours later than the usual opening time for the forex market, and will suspend trading on the forex repo market, the bourse said. The rouble plunged to an all-time low on Monday, and the dollar soared against nearly all peers after Western nations announced fresh sanctions to punish Russia for its invasion of Ukraine, and Vladimir Putin put nuclear-armed forces on high alert. (RTRS)

RUSSIA: Russia's central bank has ordered professional stock market participants to suspend the execution of all orders by foreign legal entities and individuals to sell Russian securities from Monday morning, an internal document showed. (RTRS)

RUSSIA: Traders looking to make bets on Russian equities have stormed into a $1 billion exchange-traded fund that tracks the nation’s stock market. The VanEck Russia ETF (RSX) absorbed $261 million on Thursday, the most for any day since the fund’s inception in 2007, data compiled by Bloomberg show. While some of that cash may signal create-to-lend activity -- in which new shares are created for traders to borrow and sell short -- asset managers were also likely using the fund to add cheap exposure, instead of buying individual stocks more vulnerable to volatility, according to Bloomberg Intelligence ETF analyst Eric Balchunas. (BBG)

IRAN: Iran said on Sunday it will not accept any deadline set by the West to revive its 2015 nuclear deal with world powers and wants "politically motivated" claims by U.N. watchdog IAEA about Tehran’s nuclear work to be dropped, Iranian state TV reported. "We have answered the agency's (IAEA) questions or politically motivated claims ... that we think were baseless. These dossiers should be closed," Iranian Foreign Ministry spokesperson Saeed Khatibzadeh said, according to state TV's website. Among sticking points in the indirect talks between Iran and the United States to revive the 2015 nuclear deal appear to be questions about uranium traces found by the IAEA at old but undeclared sites in Iran. "Iran accepts no deadlines," Khatibzadeh said, in apparent reaction to media reports that the United States had set a deadline for the nuclear talks in the Austrian capital Vienna. Iran's chief nuclear negotiator Ali Bagheri Kani will return to Vienna on Sunday evening for the talks, the official IRNA news agency reported. (RTRS)

IRAN: Negotiators have made significant progress in the last week or so on reviving the 2015 Iran nuclear deal but very tough issues remain, a senior U.S. State Department official said on Friday. (RTRS)

IRAN: Russia’s top diplomat at the Iran nuclear talks said there was a “very high probability” that Tehran and Washington will end their impasse over how to restore the 2015 atomic accord before the end of next week. An agreement to revive the deal, which the U.S. abandoned in 2018, would “almost for sure” be settled “next week or before the end of the next week,” Mikhail Ulyanov said on the sidelines of the talks in Vienna on Sunday, warning that last-minute “surprise or negative developments” could still scuttle the negotiations. (BBG)

IRON ORE: China’s National Development and Reform Commission and market regulator SAMR vowed to severely punish violations in iron ore market to keep prices stable and discussed ways to step up iron ore spot and futures trading during a visit to Dalian Commodity Exchange recently, according to a statement from NDRC. (BBG)

ENERGY: The International Energy Agency pledged to help ensure global energy security in the midst of the Russia-Ukraine crisis, and discussed potential courses of action at a meeting on Friday. (BBG)

ENERGY: The European Commission has approached the Japanese government about sending additional liquefied natural gas to hedge against a possible retaliatory cutoff of supply from Russia following Moscow's invasion of Ukraine, Nikkei has learned. (Nikkei)

OIL: OPEC+ will probably stick to its plan of only gradually increasing oil production when it meets this week, according to several delegates, even after Russia’s invasion of Ukraine sent prices surging. Oil’s jump last week to $100 a barrel for the first time since 2014 was triggered mostly by geopolitics and did not reflect an imbalance between supply and demand, the delegates said. The group should continue adding 400,000 barrels a day of crude to the market each month, they said. (BBG)

OIL: OPEC+ revised down its forecast for the 2022 oil market surplus by about 200,000 barrels per day (bpd) to 1.1 million bpd, according to a base scenario in a technical committee report seen by Reuters on Sunday. (RTRS)

OIL: The Saudi crown prince and French President Emmanuel Macron discussed on Sunday the impact of the Ukraine crisis on energy markets, Ekhbariya TV reported on Sunday. Crown Prince Mohammed bin Salman Al Saud stressed in a phone call with Macron the kingdom’s keenness on the stability and balance of oil markets and its commitment to the OPEC+ agreement, the state-owned TV channel added. (RTRS)

OIL: Iraq stopped oil production from two southern fields with a combined capacity of almost half a million barrels a day. The shutdowns curtail the ability of OPEC’s second-largest member to pump crude just as Russia’s invasion of Ukraine and tight supplies globally send prices soaring. (BBG)

OIL: The European Union is set to debate on Monday its response to U.S. proposals for a coordinated release of emergency oil reserves to help counter a surge in energy prices after Russia’s invasion of Ukraine. EU energy ministers will present their views on oil market developments at an extraordinary meeting in Brussels, according to three people with knowledge of the matter. Member states are divided on whether the bloc should take part in a potential release, with EU law making any release conditional on strict criteria, said the people, who asked not to be identified. (BBG)

OIL: Business Secretary Kwasi Kwarteng is considering releasing oil from the UK's strategic reserve in an effort to stabilise energy prices, according to a person familiar with his thinking. Kwarteng has already spoken to counterparts in the US, Germany, France and Canada about a coordinated move, the source said. The UK has sufficient reserves to make an effective intervention, the source added. Kwarteng is due to hold a video conference with the European commissioner for energy, Kadri Simson, on Monday (Feb 28), the source said. (BBG)

CHINA

ECONOMY: China is expected to set this year's GDP target around 5.5% at the upcoming National People’s Congress starting Saturday, as 29 out of 31 provinces set its growth target as around or above 5.5%, the China Securities Journal reported citing analysts. To realize the goal, China should advance infrastructure investment, promote the 102 major projects under the country’s 14th Five-Year Plan, and accelerate technology-based infrastructure, the newspaper said citing analysts. Monetary policy should focus on boosting overall demand by cutting RRR, lowering policy rates to reduce banks’ capital cost, and avoiding excessive appreciation of the yuan to ease export pressure, the newspaper said citing Wen Bin, chief researcher of China Minsheng Bank. (MNI)

ECONOMY/POLICY: China is studying extending preferential tax policies related to new-energy vehicle purchases, Deputy Minister of Industry and Information Technology Xin Guobin says at a briefing. Xin doesn’t elaborate. China’s new-energy vehicle industry sets to grow at fast pace. China vows to step up data safety regulation in the NEV industry. Chip supply crunch in the sector is easing. Separately, Minister Xiao Yaqing told the same briefing that China aims to create 3,000 key startups in criticcal sectors this year. (BBG)

POLICY: China must properly balance pro-growth and risk-prevention goals and stick to the position that housing is for living and not speculation, the Economic Daily said in an editorial restating a directive from a recent meeting of the Communist Party Politburo. China must also strengthen the Party central committee’s control over financial work and continue to dismantle shadow banking to effectively prevent systemic financial risks, the newspaper said. (MNI)

FISCAL: MNI: China To Fund Infrastructure Drive Via Special Bond Push

• China will rely on project-backed special bonds to power an infrastructure spending drive at the heart of this year’s growth plans, despite concerns both about adding to local governments’ already high debt loads and a lack of economically viable projects to invest in, policy advisors told MNI - on MNI Policy MainWire now, for more details please contact sales@marketnews.com.

PBOC: China's March interbank liquidity is to remain ample as the PBOC will use various tools to offset the impact of tax season and short-term global financial market volatility following the geopolitical conflict, the Securities Daily reported citing analysts. RRR cuts, interest rate cuts, structural tools and open market operations are all in the central bank’s toolbox depending on domestic demand recovery and price level, the newspaper said citing Zhou Maohua, a researcher with Everbright Bank. Fiscal deposits at commercial banks in March will also help to smoothen the gap of CNY300 billion MLF matured, the daily cited analysts as saying. The PBOC had increased reverse repos last week, net injecting CNY760 billion at month-end, the newspaper added. (MNI)

EQUITIES: China saw the number of investors in its securities market exceed 200 million as of Feb. 25, official data shows. In March 2019, the number of investors topped 150 million for the first time, according to the China Securities Depository and Clearing Co., Ltd. In January, the securities market attracted more than 1.32 million new investors. Individuals accounted for the majority of new investors, while the number of new institutional investors stood at 3,700, the data shows. By the end of last month, the newly-established Beijing Stock Exchange had more than 4.8 million qualified accounts. (Xinhua)

OVERNIGHT DATA

JAPAN JAN RETAIL SALES +1.6% Y/Y; MEDIAN +1.4%; DEC +1.2%
JAPAN JAN RETAIL SALES -1.9% M/M; MEDIAN -1.2%; DEC -1.2%
JAPAN JAN DEPT STORE, SUPERMARKET SALES +2.6%; MEDIAN +3.5%; DEC +1.4%

JAPAN JAN, P INDUSTRIAL PRODUCTION -0.9% Y/Y; MEDIAN +0.1%; DEC +2.7%
JAPAN JAN, P INDUSTRIAL PRODUCTION -1.3% M/M; MEDIAN -0.7%; DEC -1.0%

JAPAN JAN HOUSING STARTS +2.1% Y/Y; MEDIAN +2.5%; DEC +4.2%
JAPAN JAN ANNUALIZED HOUSING STARTS 0.820MN; MEDIAN 0.833MN; DEC 0.838MN

AUSTRALIA FEB MELBOURNE INSTITUTE INFLATION +3.5% Y/Y; JAN +3.0%
AUSTRALIA FEB MELBOURNE INSTITUTE INFLATION +0.5% M/M; JAN +0.4%

AUSTRALIA JAN RETAIL SALES +1.8% M/M; MEDIAN +0.3%; DEC -4.4%

AUSTRALIA Q4 COMPANY OPERATING PROFIT +2.0% Q/Q; MEDIAN +2.0%; Q3 +4.0%

AUSTRALIA Q4 INVENTORIES SA +1.1%; MEDIAN +0.0%; Q3 -1.7%

AUSTRALIA JAN PRIVATE SECTOR CREDIT +7.6% Y/Y; MEDIAN 7.6%; DEC +7.2%
AUSTRALIA JAN PRIVATE SECTOR CREDIT +0.6% M/M; MEDIAN +0.7%; DEC +0.8%

NEW ZEALAND FEB ANZ ACTIVITY OUTLOOK -2.2; JAN +11.8
NEW ZEALAND FEB ANZ BUSINESS CONFIDENCE -51.8; DEC -23.2

The FebruaryANZBusiness Outlook results show widespread anxiety about the impact of Omicron. Activity indicators fell across the board. But that has done nothing to ease inflation pressures, which remain extreme.Inflation expectations, cost expectations,and pricing intentions all hit fresh record highs. Indeed, the latter suggest CPI inflation could hit 8%, rather than the mid-6s the RBNZ and we are currently forecasting. (ANZ)

SOUTH KOREA JAN RETAIL SALES +13.9% Y/Y; DEC +11.6%
SOUTH KOREA JAN DEPARTMENT STORE SALES +37.2% Y/Y; DEC +36.5%
SOUTH KOREA JAN DISCOUNT STORE SALES +13.8% Y/Y; DEC -6.1%

UK FEB LLOYDS BUSINESS BAROMETER 44; JAN 39

CHINA MARKETS

PBOC NET INJECTS CNY290 BLN VIA OMOS MONDAY

The People's Bank of China (PBOC) injected CNY300 billion via 7-day reverse repos with the rates unchanged at 2.10% on Monday. The operation has led to a net injection of CNY290 billion after offsetting the maturity of CNY10 billion repos today, according to Wind Information.

• The operation aims to maintain stable liquidity at month-end, the PBOC said on its website.
• The 7-day weighted average interbank repo rate for depository institutions (DR007) fell to 2.1000% at 09:23 am local time from the close of 2.3429% on Friday.
• The CFETS-NEX money-market sentiment index closed at 45 on Friday vs 58 on Thursday.

CHINA SETS YUAN CENTRAL PARITY AT 6.3222 MON VS 6.3346

The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 6.3222 on Monday, compared with 6.3346 set on Friday.

MARKETS

UP TODAY (Times GMT/Local)

Date	GMT/Local	Impact	Flag	Country	Event
28/02/2022	0030/1130			AU	Business Indicators
28/02/2022	0030/1130	**		AU	Retail Trade
28/02/2022	0700/0800	***		SE	GDP
28/02/2022	0700/0800	**		SE	Retail Sales
28/02/2022	0700/0800	**		SE	Trade Data
28/02/2022	0730/0830	**		CH	retail sales
28/02/2022	0800/0900	***		ES	HICP (p)
28/02/2022	0800/0900	***		CH	GDP
28/02/2022	0800/0900	*		CH	KOF Economic Barometer
28/02/2022	1130/1230			EU	ECB Panetta speech at EUI monetary policy debate
28/02/2022	1330/0830	**		US	advance trade, advance business inventories
28/02/2022	1330/0830	*		CA	Current account
28/02/2022	1445/0945	**		US	MNI Chicago PMI
28/02/2022	1530/1030	**		US	Dallas Fed manufacturing survey
28/02/2022	1530/1030			US	Atlanta Fed's Raphael Bostic
28/02/2022	1550/1650			EU	ECB Lagarde speech on Women in Econ & Finance
28/02/2022	1630/1130	*		US	US Treasury Auction Result for 26 Week Bill
28/02/2022	1630/1130	*		US	US Treasury Auction Result for 13 Week Bill
01/03/2022	2200/0900	**		AU	IHS Markit Manufacturing PMI (f)