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Fig. 1: U.S. 5- & 10-Year Tsy Yields (%)

Source: MNI - Market News/Bloomberg


ECONOMY: War in Ukraine risks a second spike in U.K. inflation this fall and increases the likelihood of a recession, according to the Resolution Foundation. Price growth could exceed 8%, four times the Bank of England’s target, the London-based group warned in a report published Monday. For poorer households, which spend more on food and energy, inflation could reach over 10%. That would mean that the typical family income could drop 4% in real terms in the coming financial year, about 1,000 pounds ($1,304). Resolution called on Chancellor of the Exchequer Rishi Sunak to ease the pain by increasing state benefits by 8% instead of 3.1% from April when he unveils a springtime mini-budget on March 23. The think tank said he had more fiscal room thanks to stronger wage growth among high earners. (BBG)

FISCAL: Rishi Sunak is preparing a “two stage” set of further interventions to tackle the cost-of-living crisis, having conceded the need for a significantly beefed-up spring statement next week, The Telegraph understands. The Chancellor is understood to have accepted that the scale of the Ukraine crisis requires a fresh intervention by the Government as families face the biggest cost-of-living squeeze in a generation. A government source refused to be “drawn on specifics of what Rishi may or may not say” in the financial statement, planned for March 23, but added: “He should be judged by his previous actions, and people should take confidence in the fact he has acted before when there has been a time of need. People should trust that.” (Telegraph)

FISCAL: Michael Gove has ruled out tax cuts for families in the Chancellor's spring statement despite the cost-of-living crisis. (Telegraph)

FISCAL: A senior official previously charged with vetting the Treasury's plans has told the BBC chancellor Rishi Sunak can afford to postpone April's tax rises. Sir Charlie Bean, who recently left the Office for Budget Responsibility, said the plan for an immediate rise may be political rather than economic. April's National Insurance rise will tax the average worker £250 a year, and raise costs for firms which hire staff. The chancellor maintains the priority has to be shrinking the deficit. Mr Sunak said that requires "hard work, prioritisation, and the willingness to make difficult and often unpopular arguments elsewhere." But Sir Charlie said: "There is no problem in the UK borrowing several billion pounds for one extra year. What you can't run is sustained large deficits, but the pace at which you close a deficit is basically a political judgement," (BBC)

INFLATION: UK households face a £38bn hit to their budgets from an expected doubling in electricity and gas bills following Russia’s invasion of Ukraine, according to new analysis highlighting the intensifying cost of living crunch. The big increase in the cost of heating and lighting homes in 2022-23 will be the equivalent of a 6p rise in the basic rate of income tax, said Aurora Energy Research, a consultancy. The majority of the UK’s 28.5mn households are due to see their annual energy bills exceed £3,000 from October after the surge in wholesale electricity and gas prices, according to economists at Investec and Goldman Sachs. The anticipated hit to household budgets will heap pressure on chancellor Rishi Sunak to impose a windfall tax on British energy producers that profit when they can sell gas and oil extracted from North Sea fields at much higher prices. (FT)

BREXIT: The international co-operation shown in response to Ukraine suggests it should be possible to resolve a matter like the Northern Ireland Protocol, the taoiseach (Irish PM) has said. Micheál Martin was speaking a day after meeting UK Prime Minister Boris Johnson in London, during which they discussed both the Ukraine war and the protocol. They met before attending the England-Ireland rugby match on Saturday. Mr Martin has a series of engagements in London ahead of St Patrick's Day. Speaking a day after his meeting with Mr Johnson, the taoiseach told the BBC's Sunday Morning programme that some progress has already been made in the post-Brexit trade dispute between the EU and the UK. However, he said he did not believe there would be a breakthrough before the Northern Ireland Assembly election on 5 May. Asked if the protocol talks had now been "kicked into the long grass" because of the crisis in Ukraine, Mr Martin said: "I think we should concentrate, obviously, on our response to Ukraine." However, he added he also believed the crisis showed it should also be possible to make further progress on problems like the post-Brexit trade dispute. (BBC)

POLITICS: A majority of voters still want to see Boris Johnson resign despite the crisis over Russia’s invasion of Ukraine, according to the latest Opinium poll for the Observer. There has been a significant fall in the proportion of voters who want the prime minister to stand aside. However, the new poll showed that 53% still wanted to see him go – down 10 points since January… Johnson’s net approval ratings have improved from low levels. Those approving of the job he is doing make up 27%, with 54% disapproving. That gives him a net approval rating of -27, a 6-point improvement on the last poll a fortnight ago. Keir Starmer’s ratings remain largely unchanged, giving him a net approval rating of -2. Overall, Labour’s lead has fallen marginally to 2 points over the Tories. Starmer’s party has 37% support, with the Tories on 35%. When people were asked who they preferred as prime minister, “none of these” remained the clear leader. However, when forced to choose, people would still prefer a Labour government led by Starmer (44%) over a Conservative government led by Johnson (35%). (Observer)


ECB: European Central Bank Governing Council member Francois Villeroy de Galhau said uncertainty about the length of the current oil shock and the economic impact of Russia’s invasion of Ukraine mandate a cautious approach to monetary and budgetary policies in Europe. The oil shock “is very strong in its intensity, we don’t know its duration yet,” the Bank of France chief said on France Inter radio Saturday. Compared with the Covid-19 pandemic, the crisis stemming from the war “is much less violent for economic growth, but it’s translating into more inflation because of rising energy costs.” (BBG)

ECB: ECB Governing Council member Kazaks tweeted the following on Saturday: Sanctions against Russia exacerbate the problem of inflation, but that is the economic price of our self-defense. If the rise is not temporary & there are concerns that too high inflation will take root in the medium term, the central bank will do its utmost to return inflation to the 2% target.” (MNI)

FRANCE: The French government will provide a rebate of 15 euro cents ($0.16) per liter on gasoline and diesel to help households and businesses cope with surging fuel costs, Prime Minister Jean Castex said in a newspaper interview released Saturday. The measure will apply for four months starting April 1, costing the government about 2 billion euros, Castex told Le Parisien. He said it will help anyone who buys gasoline, specifically households and businesses, taxi drivers, truckers and fishermen. The announcement, four weeks ahead of France’s presidential election, adds to more than 20 billion euros of tax cuts and subsidies introduced by the French government in recent months to cap electricity and gas bills. (BBG)

FRANCE: France’s central bank said the war in Ukraine is already affecting the economy and creating high uncertainty that makes it tricky to forecast how much inflation will accelerate or the extent to which the recovery from the Covid pandemic will slow. Instead of publishing its regular economic projections, the Bank of France took the unprecedented step of presenting two scenarios. Its “conventional” scenario is based on forecasts from Feb. 28, while a “downgraded” version accounts for the rise in oil, gas and wheat prices seen in early March. Growth in 2022 will be about 0.5 percentage points lower due to the war in the first scenario, and 1 point lower in the second. “It is a negative economic shock,” Bank of France Governor Francois Villeroy de Galhau said in an interview with Le Parisien newspaper. “It’s less growth, more inflation, but in proportions that are still uncertain.” (BBG)

FRANCE: President Emmanuel Macron holds a 14.5 percentage-point lead over his closest challenger, National Rally candidate Marine Le Pen, ahead of the first round of France’s presidential election. The incumbent would get 30.5% of the ballots in the April 10 vote, versus Le Pen’s 16%, according to an Ipsos/Sopra Steria poll for France Info radio and Le Parisien newspaper released on Saturday. Far-right pundit Eric Zemmour is seen getting 13.5% of the votes, 1.5 points ahead of left-wing candidate Jean-Luc Melenchon, while Republican Valerie Pecresse would get 11%, the survey showed. (BBG)

ITALY: Italy’s government will have to plan for additional borrowing this year to protect businesses and families from the fallout of Russia’s invasion of Ukraine, Agriculture Minister Stefano Patuanelli said. “I think extra deficit spending today is more than justified and I believe it is necessary,” Patuanelli said in an interview on Radio 24. He added that the Cabinet is likely to discuss the matter “very soon.” (BBG)

RATINGS: Sovereign rating reviews of note from after hours on Friday include:

  • S&P affirmed Portugal at BBB; Outlook Stable


INFLATION: President Joe Biden has dismissed criticism that his $1.9 trillion March 2021 stimulus package was a major factor in the jump in living costs. He said of inflation on Friday, “Democrats didn’t cause this problem, Vladimir Putin did.” White House officials have argued that Putin’s actions in Ukraine were responsible for at least a 75 cent per gallon rise in fuel prices in recent weeks, as well as increased food costs after Russia suspended exports of wheat, rye, barley and corn. The Biden administration has stepped up scrutiny of companies in industries including meatpacking that the White House says are suffering from a lack of competition -- contributing to outsize price hikes. (BBG)

FISCAL: A U.S. gasoline tax cut is among the options being considered to provide relief to consumers, U.S. Treasury Secretary Janet Yellen said on Friday, adding she was confident that the country's economy would perform well this year. "We're looking at a range of things that we might do to relieve consumers. The gas tax is one of the things on the list", Yellen told reporters on Friday at a social services agency in Denver, Colorado. However, she added that she had concerns that cutting the gasoline tax could cause benefits to flow to oil companies and not to consumers. She also said that a tighter monetary policy to fight inflation could cause recession, but added that the Federal Reserve should be able to balance its dual mandate for maximum employment and price stability. (RTRS)

DOLLAR: Treasury Secretary Janet Yellen said the U.S. dollar is in no danger of losing its status as the world’s dominant reserve currency as a result of sanctions imposed against Russia over its invasion of Ukraine. “I don’t think the dollar has any serious competition, and is not likely to for a long time,” Yellen told reporters in response to questions following a speech in Denver on Friday. Some commentators, including Credit Suisse Group AG interest-rate strategist Zoltan Pozsar, have warned sanctions that blocked Russia’s access to its foreign currency reserves could drive other countries away from the dollar. (BBG)


GLOBAL TRADE: Apple Inc. supplier Foxconn is halting operations at its Shenzhen sites, one of which produces iPhones, in response to the lockdown on the tech hub city. The Taiwanese company, also known as Hon Hai Precision Industry Co., has its China headquarters in the area and a key manufacturing site in Guanlan. It is suspending operations at the two campuses and has reallocated production to other sites to reduce the impact from the disruption, the company said in a statement. Foxconn didn’t specify the length of the suspension. The measures from the Chinese government call for non-essential businesses in Shenzhen to halt until March 20. While the shutdown may affect production of many of the devices Foxconn makes for Apple and other brands, demand for electronics typically troughs in the first quarter of every year after the holiday-season peak. (BBG)

GLOBAL TRADE: All operations in Shenzhen Yantian Port and trailer services in surrounding areas are normal after the city tightened Covid control measures, the port says in a statement on its WeChat account. (BBG)

INFLATION: Consumers around the world will feel the “enormous impact” of Russia’s war on Ukraine through sharply higher food prices and significant disruption to agricultural supply chains, according to industry executives and leading European officials. (FT)

U.S./CHINA: China and U.S. should be able to strike a deal on the auditing dispute that threatens the listings of key Chinese firms on American stock exchanges, according to a senior executive at China’s top investment bank. Regulators of the two countries are believed to be having “earnest” discussions with an aim to resolve the issue, Wang Sheng, head of the investment banking division at China International Capital Corp., said in an opinion piece published by the Economic Daily on Sunday. The newspaper is affiliated with the State Council, China’s cabinet. “As a participant in the capital markets of two nations, we believe a solution can be found that both ensures data security of the region where the companies are domiciled and meet the regulatory requirements of the region where the firms are listed,” Wang said in the article. (BBG)

CORONAVIRUS: Public health experts at the World Health Organization have begun discussing how and when to call an end to the global Covid-19 crisis, exploring what would be an important milestone more than two years after the emergence of the virus. The WHO said it isn’t currently considering such a declaration. While cases have fallen in many places, fatalities have spiked in Hong Kong, and this week China reported more than 1,000 new daily cases for the first time in two years. Instead, the discussions at the Geneva-based agency are focusing on what conditions would eventually signal that the public health emergency declared on Jan. 30, 2020, is over. Such a declaration would be not just a meaningful symbolic step, it would add momentum to the rollback of many pandemic-era public health policies. (BBG)

JAPAN: A Japanese government spokesperson said on Monday that currency stability was important and that the government would continue to closely monitor the impact of foreign exchange moves on the economy. Deputy Chief Cabinet Secretary Yoshihiko Isozaki made the comment at a news conference when asked about the dollar's climb to a five-year high against the yen to 117.61 yen on Monday morning. (RTRS)

RBA: MNI INSIGHT: Deputy Debelle Exit Creates RBA Succession Issues

  • The surprise resignation of Reserve Bank of Australia Deputy Governor Guy Debelle last week has created fresh questions on who will succeed current Governor Philip Lowe when his seven year term ends next year, and what that means for the overall stance of monetary policy.on MNI Policy MainWire now, for more details please contact

AUSTRALIA: Australia’s federal budget, due later this month, will focus on households under strain from soaring prices of everything from bread to gasoline, Assistant Treasurer Michael Sukkar told Sky News in an interview. “Cost of living is a significant issue,” the minister said. “We have an economic recovery underway, but it can’t be taken for granted. We’ll take into account the fact that households are feeling the pressures of cost of living and that will be something that is certainly a focus of the budget.” (BBG)

NEW ZEALAND: New Zealand is cutting fuel taxes and halving public transport fares in response to the "wicked perfect storm" fueling global inflation. Regular unleaded petrol costs more than $3 a litre in New Zealand, with some economists predicting it could reach $4 this year. Prime Minister Jacinda Ardern said Russia's invasion of Ukraine has produced a "global energy crisis", and a "shock and a spike in prices at the pump felt by the whole world". "The impact of the war sits on top of the pain already caused by the pandemic with global supply chain disruption and increases in consumer demand causing high levels of inflation in many countries," she said. "We are in a wicked perfect storm, and it's a storm that's affecting people's lives." New Zealanders are feeling the pinch more than most, currently enduring the highest CPI inflation levels since the early 1990s. (AAP)

SOUTH KOREA: A spokesperson for President-elect Yoon Suk-yeol denied a news report Monday that Prime Minister Kim Boo-kyum is being considered for retention in the incoming government. The Chosun Ilbo newspaper carried the report earlier in the day, saying retaining Kim would avoid political wrangling during the parliamentary confirmation process for a new prime minister and demonstrate a commitment to working together with the opposition party. "Prime Minister Kim is a person of virtue and is respected," said Rep. Kim Eun-hye of the People Power Party (PPP), Yoon's spokesperson, at a press briefing. "But there has been no discussion about retaining him as prime minister." The spokesperson said the process of selecting a new prime minister will begin in time. "We will carry out the selection process in order for the new prime minister to work with us in time for the launch of the new administration," she said. (Yonhap)

NORTH KOREA: South Korea's presidential office believes North Korea could test an intercontinental ballistic missile (ICBM) as soon as Monday, local media reported, citing an unnamed source. Tensions on the Korean peninsula have been rising amid growing signs that Pyongyang could soon follow through on its threats to restart testing ICBMs, breaking a self-imposed 2017 moratorium. Outgoing President Moon Jae-in's office has told President-elect Yoon Suk-yeol that a test launch was imminent and that it would not be a surprise if it took place on Monday, the Chosun Ilbo newspaper reported. (RTRS)

CANADA/RATINGS: DBRS Morningstar confirmed Canada at AAA; Stable Trend.

BRAZIL: Brazilian President Jair Bolsonaro criticized stiff price hikes for gasoline and diesel by state-controlled oil company Petrobras on Saturday, saying the firm had reported an "absurd" amount of profit. (RTRS)

RUSSIA: Russian and Ukrainian officials gave their most upbeat assessments yet on Sunday of progress in their talks on the war in Ukraine, suggesting there could be positive results within days. Separately, U.S. Deputy Secretary of State Wendy Sherman said Russia was showing signs of willingness to engage in substantive negotiations about ending a conflict in which thousands have died. More than 2.5 million people have fled. Ukraine has said it is willing to negotiate, but not to surrender or accept any ultimatums. "We will not concede in principle on any positions. Russia now understands this. Russia is already beginning to talk constructively," Ukrainian negotiator and presidential adviser Mykhailo Podolyak said in a video posted online. "I think that we will achieve some results literally in a matter of days," he said. RIA news agency quoted a Russian delegate, Leonid Slutsky, as saying the talks had made substantial progress. "According to my personal expectations, this progress may grow in the coming days into a joint position of both delegations, into documents for signing," Slutsky said. Neither side indicated what the scope of any agreement might be. Their public comments were issued almost at the same time. They came on day 18 of the war which began when Russian forces invaded Ukraine on Feb. 24 in what the Kremlin terms a special military operation. (RTRS)

RUSSIA: Ukrainian presidential adviser Oleksiy Arestovych said Ukraine and Russia were actively conducting talks on Sunday, with the situation around the besieged city of Mariupol a particular focus for the Ukrainian authorities. “Talks are continuing right now,” he said in an interview on national television. He said Ukraine had enough troops deployed in Mariupol to prevent its capture by encircling Russian forces. (RTRS)

RUSSIA: Russia has launched its most deadly attack yet on western Ukraine, striking a military base near the Polish border in a warning to the Nato alliance which is supplying Kyiv with weapons to fight Vladimir Putin’s invasion. A day after Russia’s deputy foreign minister Sergei Ryabkov branded western arms convoys to Ukraine a “legitimate military target”, Moscow bombarded the Yavoriv International Centre for Peacekeeping and Security, 30km north-west of Lviv. The raid on the base, which has been used for training involving western instructors, took Putin’s military assault to within 10 miles of Nato’s border, underlining the danger that Europe’s biggest land invasion since 1945 could spread beyond Ukraine. (FT)

RUSSIA: President Joe Biden said he would defend NATO to the point of World War III, but that he won’t risk touching off a wider conflict by fighting Russia in Ukraine and ruled out establishing a no-fly zone. “As we provide this support to Ukraine, we’re going to continue to stand together with our allies in Europe and send an unmistakable message: that we will defend every inch of NATO territory,” Biden said in Philadelphia on Friday during a speech to Democrats. “If they move once -- granted, if we respond, it is World War III, but we have a sacred obligation on NATO territory.” But he again said the U.S. won’t fight Russia in Ukraine, including by establishing a no-fly zone. “We will not fight the third World War in Ukraine,” he said. (BBG)

RUSSIA: National Security Adviser Jake Sullivan said Sunday that the U.S. will "defend every inch of NATO territory" in the wake of a Russian attack on western Ukraine this weekend. Sullivan added that an attack on NATO territory—even an accidental shot—the "NATO alliance would respond to that." Sullivan also told CNN's "State of the Union" Sunday that the attack was "not a surprise" to the American intelligence and national security community, which predicted that Russian President Vladimir Putin would launch attacks all across Ukraine. (Axios)

RUSSIA: Pentagon press secretary John Kirby said Russian forces are "broadening their target sets" after rockets hit a Ukrainian military base near the Polish border overnight. "Look, this is the third now military facility or airfield that the Russians had struck in western Ukraine in just the last couple of days," Kirby told ABC "This Week" co-anchor Martha Raddatz, on Sunday. "So, clearly, at least from an airstrike perspective, they're broadening their target sets." (ABC)

RUSSIA: The United States is willing to take diplomatic steps that the Ukrainian government would find helpful, a State Department spokesperson said on Saturday, after President Volodymyr Zelenskiy said the West should be more involved in negotiations to end the war. "If there are diplomatic steps that we can take that the Ukrainian Government believes would be helpful, we're prepared to take them", the spokesperson said. "We are working to put the Ukrainians in the strongest possible negotiating position, including by increasing pressure on Russia by imposing severe costs and by providing security assistance to help Ukrainians defend themselves." (RTRS)

RUSSIA: The Russian defence ministry said on Saturday that the humanitarian situation in Ukraine continued to decline rapidly, and in some cities had reached catastrophic proportions, the RIA news agency reported. (RTRS)

RUSSIA: Vladimir Putin did not show a willingness to end the war with Ukraine during a call on Saturday with French president Emmanuel Macron and German chancellor Olaf Scholz, a French presidency official said. Scholz and Macron called for an immediate ceasefire in Ukraine during the 75-minute phone call with Russian president Vladimir Putin, a German government spokesman added. (Guardian)

RUSSIA: The UK Ministry of Defence said on Sunday that Russian naval forces had established a distant blockade of Ukraine's Black Sea Coast, isolating Ukraine from international maritime trade. Russian naval forces are continuing to carry out missile strikes against targets in Ukraine, the ministry said in its intelligence update posted on Twitter. Russia could conduct further amphibious landing operations in the coming weeks, similar to the one conducted in the Sea of Azov, the update added. (RTRS)

RUSSIA: Russian occupying forces are planning to stage a “pseudo” referendum in the southern Ukrainian port city of Kherson to create a breakaway region, said the deputy head of the local council. “The creation of the (republic) will turn our region into a hopeless hole without life or a future,” Sergey Khlan said in a post on social media. (Al Jazeera)

RUSSIA: Ukraine Foreign Minister Dmytro Kuleba on Sunday accused Russian forces of abducting a second Ukrainian mayor, Yevhen Matveyev, from the southern city of Dniprorudne. (Axios)

RUSSIA: Brent Renaud, an award-winning American filmmaker and journalist, was killed in Ukraine on Sunday while reporting in a suburb of the capital, Kyiv, according to Ukraine’s Interior Ministry. Mr. Renaud, 50, had worked for a number of American news and media organizations in the past, including HBO, NBC and The New York Times. The Ukrainian authorities said he was killed in Irpin, a suburb that has been the site of intense shelling by Russian forces in recent days, but the details of his death were not immediately clear. Ukrainian officials said another journalist was wounded as well. At the time of his death Mr. Renaud was on assignment for Time Studios working on a “project focused on the global refugee crisis,” according to a statement from Time executives. (NYT)

RUSSIA: Ukraine is showing restraint towards Belarus but will fight back if Belarusian soldiers cross the border to join the Russian invasion, Ukraine's top security official Oleksiy Danilov said on Friday. Danilov said Ukraine was being careful in dealing with Belarus despite the country being used as a launchpad for Russian planes to attack Ukraine, Danilov said. If "one fighter crosses our border, we will fight back," Danilov said. (RTRS)

RUSSIA: Vladimir Putin agreed to provide Belarus with the most up-to-date military equipment in a meeting with Alexander Lukashenko at the Kremlin, amid fears that Minsk will now join the Russian invasion of Ukraine. The two leaders also agreed to support each other in the face of Western sanctions, including on energy prices, a Belarusian news agency reported. It comes as Kyiv warned that Belarus could join the invasion as early as Friday night after Russian fighter jets fired into the country from Ukrainian air space in an apparent ‘false flag’ attack. The Pentagon said that the US had not yet seen evidence that troops from Belarus were in Ukraine. "That's not to say that it couldn't happen or that it wouldn't happen,” a Pentagon spokesman said. (Telegraph)

RUSSIA: Prime Minister Naftali Bennett pushed Ukrainian President Volodymyr Zelensky to accept an offer from Russian President Vladimir Putin, which would require Kyiv to make significant concessions to end Russia’s invasion, a senior Ukrainian official said Friday, according to two Hebrew media reports. The prime minister’s office quickly denied the claim. On Saturday, a senior adviser to Zelensky also denied the story. “If I were you, I would think about the lives of my people and take the offer,” Bennett told Zelensky during a phone call on Tuesday, according to the Ukrainian official, who spoke to Walla and Haaretz on condition of anonymity. (Times of Israel)

RUSSIA: Ukraine's atomic energy ministry on Sunday said power had been restored to the Chernobyl nuclear power plant, which meant cooling systems would operate normally and not have to use backup power. The ministry made the announcement in an online post. Ukraine had earlier warned of an increased risk of a radiation leak if a high-voltage power line to the plant were not repaired. It had been damaged in fighting. (RTRS)

RUSSIA: The United States on Saturday said it would rush up to $200 million in additional small arms, anti-tank and anti-aircraft weapons to Ukraine, as Ukrainian officials pleaded for more equipment to defend against heavy shelling by Russian forces. President Joe Biden on Saturday authorized the additional security assistance, the White House said, paving the way for the "immediate" shipment of fresh military equipment to Ukraine, a senior administration official said. (RTRS)

U.S./CHINA/RUSSIA: U.S. National Security Adviser Jake Sullivan, who is due to meet with China's top diplomat Yang Jiechi in Rome on Monday, warned Beijing that it would "absolutely" face consequences if it helped Moscow evade sweeping sanctions over the war in Ukraine. (RTRS)

U.S./CHINA/RUSSIA: The U.S. and China will hold the first high-level, in-person talks since Russia’s full invasion of Ukraine, as the Biden administration continues to try to enlist Beijing to exert influence on its neighbor to end the crisis. The White House said National Security Adviser Jake Sullivan will meet in Rome on Monday with China’s top diplomat, Communist Party Politburo member Yang Jiechi. President Joe Biden’s top advisers have been working to increase pressure on China to enforce sanctions on Russia’s economy imposed by the U.S. and its European and Asian allies. So far, U.S. officials have said they haven’t seen evidence that Beijing has tried to circumvent them, though Sullivan warned China against such a move on Sunday. (BBG)

RUSSIA: Russia has asked China for military equipment to support its invasion of Ukraine, sparking concern in the White House that Beijing may undermine western efforts to help Ukrainian forces defend their country. US officials told the Financial Times that Russia had requested military equipment and other assistance since the start of the invasion. They declined to give details about what materiel Russia had requested. Another person familiar with the situation said the US was preparing to warn allies about the situation amid some indications that China may be preparing to help Russia. Other US officials have also said there were signs that Russia was running out of some kinds of weaponry as the war in Ukraine approaches the start of its third week. (FT)

RUSSIA: The spokesperson for China's embassy in Washington responded to media reports on Sunday that Moscow had asked Beijing for military equipment since launching its invasion of Ukraine by saying, "I've never heard of that." The spokesperson, Liu Pengyu, said China's priority was to prevent the tense situation in Ukraine from getting out of control. "The current situation in Ukraine is indeed disconcerting," he said in an emailed response to a query from Reuters. (RTRS)

RUSSIA: Moscow is satisfied with the current level of its bilateral dialogue with Beijing as China remains a reliable partner of Russia, Deputy Foreign Minister Sergey Ryabkov said on Saturday. "We are completely satisfied with the current development of our dialogue and practical interaction with China," Ryabkov said speaking on air of Russia’s Channel One television broadcaster. "They [China] are our closest neighbor, friend and strategic partner. A very reliable partner and I have no doubts about it whatsoever." The Russian diplomat stressed that it was not the right moment to go into details how relations with China would be developing further. "Perhaps, we should not give away extra ammunition to our enemies as it can be later used against us." (TASS)

RUSSIA: G7 nations said on Friday they will take steps to deny Russia a so-called "most favoured nation" status, which would revoke benefits of Russia's membership of the World Trade Organization (WTO). "We welcome the ongoing preparation of a statement by a broad coalition of WTO members, including the G7, announcing their revocation of Russia’s Most Favoured Nation status", the G7 countries said in a joint statement released by the White House. (RTRS)

RUSSIA: European Union governments are discussing sanctioning the owner of Chelsea Football Club, Roman Abramovich, along with more than a dozen other prominent Russians, according to documents seen by Bloomberg and people familiar with the matter. The list, which still needs to be approved by EU governments and could change before that happens, also includes Tigran Khudaverdyan, the executive director and deputy CEO of Yandex NV, a Russian internet search engine that also operates a large ride-hailing operation, and Victor Rashnikov, who owns Magnitogorsk Iron & Steel PJSC, one of Russia’s biggest steelmakers. EU ambassadors met on Sunday to discuss a fourth round of sanctions and trade restrictions, after European Commission President Ursula von der Leyen previewed the measures on Friday. Diplomats aim to finalize the package as early as Monday. (BBG)

RUSSIA: Finland and Sweden countered Russian warnings of retaliation should the Nordic nations join the North Atlantic Treaty Organization. Military and political consequences may follow if the two countries join the pact, Sergei Belyaev, director of the Second European Department of Russia’s foreign ministry, told the state-owned news agency Interfax. Their non-participation in NATO is “an important factor in ensuring security and stability in northern Europe,” he said. “We reject that kind of statement. Swedish security policy is determined by Sweden,” said Ann Linde, Sweden’s minister for foreign affairs. “Russia has nothing to do with our independent decisions.” Finland “as a sovereign state makes its own security policy decisions based on our own interest,” said Marja Liivala, director general of the Department for Russia, Eastern Europe and Central Asia at Finland’s ministry for foreign affairs. “It’s very important for Finland that the NATO Open Door policy remains.” (BBG)

RUSSIA: Deutsche Bank said Friday that it was winding down its operations in Russia, one day after its chief financial officer said it wasn’t “practical” to shutter the unit. “Like some international peers and in line with our legal regulatory obligations, we are in the process of winding down our remaining business in Russia while we help our non-Russian multinational clients in reducing their operations,” Dylan Riddle, a U.S.-based spokesperson for the German bank, said in an email. “There won’t be any new business in Russia,” he said. (CNBC)

RUSSIA: British finance minister Rishi Sunak called on more British companies on Sunday to wind down their existing investments in Russia and said new investments should be halted after President Vladimir Putin's decision to invade Ukraine. "While I recognise it may be challenging to wind down existing investments, I believe there is no argument for new investment in the Russian economy," Sunak said in a video message on Twitter. (RTRS)

RUSSIA: Russian prosecutors have issued warnings to Western companies in Russia, threatening to arrest corporate leaders there who criticize the government or to seize assets of companies that withdraw from the country, according to people familiar with the matter. Prosecutors delivered the warnings in the past week to companies including McDonald’s Corp. , International Business Machines Corp. and KFC owner Yum Brands Inc., the people said. The calls and visits included threats to sue the companies and seize assets including trademarks, the people said. Russian President Vladimir Putin last week expressed support for a law to nationalize assets of foreign companies that leave his country over the war in Ukraine. The prosecutors’ warnings were directed at companies across sectors, including technology, food, apparel and banking, the people familiar with the matter said. (WSJ)

RUSSIA: Bank of Russia announced it’s extending a halt on stock trading on the Moscow Exchange to March 18 from March 14. The central bank said it will issue a decision later on trading from March 21-25 it said in a website statement. Stock trading on the Moscow Exchange has been closed since Feb. 25, one of the longest-ever shutdowns for a market of Russia’s size. (BBG)

RUSSIA: President Biden said he expected the Russian stock market to blow up the second it reopens in response to crippling sanctions that have been imposed on the country in response to its invasion of Ukraine. President Biden said he expected the Russian stock market to blow up the second it reopens in response to crippling sanctions that have been imposed on the country in response to its invasion of Ukraine. (NY Post)

RUSSIA: The Russian central bank said money transfers can only be withdrawn in Rubles. The restrictions, which come into effect March 12, apply to transfers from banks abroad as well as from electronic wallets, the Bank of Russia said in a statement Friday. (BBG)

RUSSIA: Russian central bank says lenders can’t charge commission on individuals withdrawing dollars from their hard currency accounts or deposits, effective until Sept. 9, according to statement from the regulator. Lenders also can’t charge commission to convert any foreign currencies into dollars for their subsequent withdrawal. Commission received by lenders since March 9 for providing hard currency to individuals must be returned to clients. (BBG)

RUSSIA: Russia has already lost access to almost half of its reserves and sees more risks to President Vladimir Putin’s war chest due to increased pressure from the West on China, said Finance Minister Anton Siluanov. “The total volume of our reserves is about $640 billion, and about 300 billion are in such condition that we can’t use them now,” he told state television in an interview on Sunday. “We see what pressure Western countries put on China” to limit access to reserves in yuan, he said. “But I think our partnership ties with China will let us not just preserve it but expand it.” (BBG)

RUSSIA: Russia has threatened to pay international bondholders in roubles rather than dollars just days before a key interest payment on its external debt comes due. Anton Siluanov, Russia’s finance minister, said on Sunday that it was “absolutely fair” the country would make all of its sovereign debt payments in roubles until western sanctions that he claimed have frozen $300bn of the country’s reserves were lifted. Moscow is scheduled to make a combined $117mn in interest payments this Wednesday on two dollar-denominated bonds, according to JPMorgan. Neither bond’s contracts gives Russia the option of paying in roubles, according to the Wall Street bank. (FT)

RUSSIA: Roughly $13 billion of Russian government debt could be ineligible to be delivered in a credit-default swaps auction, a panel of banks and investors ruled Friday, potentially complicating hedges against a Russia default. After three days of meetings, members of the Credit Derivatives Determinations Committee said that because of a feature in the six bonds allowing the government to make payments in rubles -- rather than the dollars or euros they were issued in -- they would be ineligible as so-called deliverable obligations. As a default by Russia becomes increasingly probable, investors have been loading up on credit swaps tied to the country, while also scrambling to read the small print on about $40 billion of the contracts. CDS are insurance-like instruments designed to cover losses if a country or company fails to meet its obligations. (BBG)

RUSSIA: Kristalina Georgieva, the managing director of the International Monetary Fund, said on Sunday that a Russian default was not improbably amid global sanctions that have devastated its economy. "I can say that no longer we think of Russian default as improbable event," Georgieva said on CBS’s “Face the Nation” on Sunday. "Russia has the money to service its debt, but cannot access it." When asked by CBS’s Margaret Brennan if such a situation could trigger a financial crisis for the rest of the world, the IMF head responded, “For now, no.” (The Hill)

SOUTH AFRICA: A campaign for South African President Cyril Ramaphosa to retain the leadership of the ruling African National Congress when it holds internal elections in December is gathering momentum, with some key party officials throwing their weight behind him. “There is an emerging consensus that the president must get a second term,” Justice and Correctional Services Minister Ronald Lamola, who sits on the ANC’s national executive committee, said in an interview. “It will be good for stability of the country to have him continue.” (BBG)

SOUTH AFRICA: Eskom suspended load-shedding from 8pm on Sunday due to ''sufficient recovery in generating capacity''. It said in a statement: “Eskom takes its mandate of supplying electricity to SA seriously and is fully aware of the impact load-shedding is having on the whole country. Unfortunately‚ at times it becomes necessary to implement load-shedding to protect the system and prevent a blackout. “Total breakdowns have been reduced to 12‚422MW while planned maintenance is 6‚540MW of capacity.” Eskom said it had returned four generation units to service since Friday. Emergency generation reserves have also sufficiently recovered. Eight other generating units are expected to return to service by Wednesday evening. (Business Day)

IRAN: The U.S. State Department on Friday said U.S. negotiator Robert Malley and his team have returned to Washington for consultations after negotiations to reach an Iran nuclear deal paused. U.S. State Department spokesperson Ned Price told reporters the United States continues to believe that a potential deal to return to the Iran nuclear agreement is close, but said decisions need to made in places like Tehran and Moscow. (RTRS)

IRAN: The US has ruled out offering any sanctions relief to Russia in order to clinch its support for an agreement to revive the 2015 nuclear accord with Iran, rebuffing a last-minute demand from Moscow. A state department spokesperson on Sunday told the Financial Times that the new economic sanctions imposed on Russia in response to its invasion of Ukraine were “unrelated” to the Iran deal and “should not have any impact on its implementation”. “The United States has no intention of offering Russia anything new or specific as it relates to these sanctions, nor is anything new required to successfully reach an agreement on a mutual return to full implementation of the [nuclear deal with Iran],” the state department spokesperson added. (FT)

IRAN: France, Britain and Germany warned Russia on Saturday that its demands to have its trade guaranteed with Iran risked the collapse of an almost-completed nuclear deal. (RTRS)

MIDDLE EAST: Iran said it carried out a missile strike in northern Iraq and suspended talks on restoring diplomatic ties with Saudi Arabia, days after international negotiations on the Iranian nuclear deal stalled. The U.S., which is key to reviving the nuclear deal that offers Iran the prospect of sanctions relief, condemned the early Sunday attack in the northern Iraqi city of Erbil. Iran’s Islamic Revolutionary Guard Corps said it targeted what it called an Israeli “strategic center.” U.S. Deputy Secretary of State Wendy Sherman said on Fox News that no one was hurt or killed, denying reports that the U.S. consulate in Erbil was the target. “The strikes were an outrageous violation of Iraq’s sovereignty,” State Department spokesman Ned Price said in a statement. In a separate statement late Sunday, the White House condemned the attack, saying it targeted a civilian residence without any justification. Iran also “unilaterally and temporarily” suspended Iraqi-brokered talks with Saudi Arabia on mending diplomatic ties between the two rival powers, Iran’s state-run Nour News reported. (BBG)

METALS: JPMorgan Chase & Co. is the largest counterparty to the nickel trades of the Chinese tycoon caught in an unprecedented short squeeze, putting the bank at the center of one of the most dramatic moments in metals market history. About 50,000 tons of Xiang Guangda’s total nickel short position of over 150,000 tons is held through an over-the-counter position with JPMorgan, according to people familiar with the matter. Based on that figure, the tycoon’s company, Tsingshan Holding Group Co., would have owed JPMorgan about $1 billion in margin on Monday. (BBG)

ENERGY: Russia is ready for a harsh confrontation with the European Union in the energy sector, if the need arises, Director of the Russian Foreign Ministry's European Cooperation Department Nikolai Kobrinets said. "Russia remains a reliable supplier, a world-class guarantor of energy security. We value this reputation, but are ready for a harsh confrontation in the energy sector, if the need arises. I believe, the European Union would not definitely profit from it, because we have a greater safety margin and stronger nerves," Kobrinets told Interfax in an interview. (RTRS)

ENERGY: Russia urged India to deepen its investments in the sanction-hit country's oil and gas sector, and is keen on expanding the sales networks of Russian companies in Asia's third-largest economy. "Russia's oil and petroleum product exports to India have approached $1 billion, and there are clear opportunities to increase this figure," said Russia's Deputy Prime Minister Alexander Novak, according to a statement shared by Russia's embassy in India late on Friday. "We are interested in further attracting Indian investment to the Russian oil and gas sector and expanding Russian companies' sales networks in India," Novak told Indian Minister of Petroleum and Natural Gas Hardeep Singh Puri. (RTRS)

ENERGY: Germany should rethink its ban on allowing new drilling for oil and gas in the North Sea as it tries to reduce its dependence on Russian energy due to the invasion of Ukraine, Finance Minister Christian Lindner said on Sunday. (RTRS)

OIL: U.K. Prime Minister Boris Johnson may travel to Saudi Arabia next week for talks on oil, Sky News reported without saying where it got the information. A spokesperson from the Prime Minister’s office told Sky the trip hadn’t been finalized. The Times of London also reported that Johnson would travel to the kingdom. Johnson has come under increasing pressure from Conservative Party allies to try to use his influence with Crown Prince Mohammed bin Salman to convince Saudi Arabia to pump more oil at a time of surging energy prices, Sky said. Johnson has maintained better relations with the crown prince than U.S. President Joe Biden and other Group of Seven leaders, and the two exchange WhatsApp messages, Sky said. Johnson had twice planned to visit Saudi Arabia in recent years, but the trips never materialized. He postponed the most recent effort last month because of Russia’s invasion of Ukraine, Sky reported. (BBG)

OIL: The U.S. seizure of Iranian tankers in recent months has not stopped sanctions-hit Tehran from increasing oil exports, Iran's oil minister was quoted as saying on Saturday. “The United States has on several occasions in the past months violated Iranian oil tankers to prevent export of shipments," Javad Owji said in an interview carried by Iranian media. "When the enemy realised it could not stop our exports and contracts, they went after our ships," Owji said. (RTRS)

OIL: Marathon Pipe Line Inc. has shut down a pipeline in Illinois that leaked crude oil into a local canal, the company said on Saturday. The leak into the Cahokia diversion channel was first detected on Friday morning and booms were deployed to try and contain the oil, parent company Marathon Petroleum Corp. said in a statement. An estimated 165,000 gallons were released into the canal before containment, the Illinois Environmental Protection Agency told local news station KTVI. (BBG)


PBOC: The People’s Bank of China is expected to further reduce banks’ reserve requirement ratios or cut rates to help boost credit and stabilize growth, said the China Securities Journal in the front-page citing analysts. The PBOC may on Tuesday cut the rate of new medium-term lending facilities when rolling over the maturing MLF, or it may wait after the Federal Reserve's March meeting to assess the spillover impact, the newspaper said citing Zhang Yu, chief economist with Huachuang Securities. There could be a series of two to three rate cuts and the benchmark one-year Loan Prime Rate could drop by 20 basis points, the newspaper said citing Cheng Shi, chief economist of ICBC International. Further RRR cuts are necessary given the weaker-than-expected new loans and aggregate finance data in February, the newspaper said citing analysts. (MNI)

YUAN: The yuan may experience a period of adjustments as China-U.S. growth rates narrow, as the U.S. pursues rate hikes and as the U.S. dollar continues to gain strength, the China Securities Journal said citing industry experts. The Chinese currency is unlikely to experience significant depreciation, as China’s exports will still be resilient enough to support the currency and its economy continues to recover, it said. After nearly hitting 6.2 against the dollar, the Chinese currency has slowly backed down from 6.3, as China’s loosening policies contrast with the expected U.S. tightening. (MNI)

CORONAVIRUS: China placed the 17.5 million residents of the southern city of Shenzhen into lockdown for at least a week, seeking to halt a growing Covid-19 outbreak with a move that could cause disruption and production delays in the key technology hub and port. The lockdown, which came after virus cases doubled nationwide to nearly 3,400, will be accompanied by three rounds of city-wide, mass testing, according to a government notice. The measure, announced Sunday, followed earlier restrictions placed on Shenzhen’s central business district, and will last until March 20. All bus and subway systems were shut, and businesses, except those providing essential services, have been closed. Employees were told to work from home if they can. Residents will be barred from leaving Shenzhen -- home to the headquarters of giants Huawei Technologies Co. and Tencent Holdings Ltd., as well as one of China’s busiest ports -- except in limited situations. (BBG)

CORONAVIRUS: Beijing's health authorities said on Sunday that they will further expand nucleic acid testing as the capital currently stands "at a critical stage of epidemic control." (Global Times)

CORONAVIRUS: The city of Jilin – centre of the outbreak in the northeast – was partially locked down Saturday, while residents of Yanji, an urban area of nearly 700,000 bordering North Korea, were confined to their homes Sunday. (France 24)

CORONAVIRUS: China’s Dongguan city in Guangdong province suspends the operation of buses and subway network from March 14, according to a statement on the local government wechat account. The city also closes dine-in service and entertainment facilities. In-person classes for students are also suspended. (BBG)

COMMODITIES: China plans a massive increase in coal mining, a move that will dramatically reduce its reliance on imports and deal a blow to its near-term climate actions. The National Development and Reform Commission, the nation’s top economic planner, told officials from major mining regions at a meeting late last week that it wants to boost domestic production capacity by about 300 million tons, according to people familiar with the matter. It also plans to build a 620 million-ton stockpile of the fuel split between government, miners and users. Such an increase in output would cut the country’s already scant dependence on foreign imports after global prices hit record levels in the wake of Russia’s invasion of Ukraine. (BBG)






The People's Bank of China (PBOC) injected CNY10 billion via 7-day reverse repos with the rate unchanged at 2.1% on Monday. This keeps the liquidity unchanged after offsetting the maturity of CNY10 billion repos today, according to Wind Information.

  • The operation aims to keep liquidity reasonable and ample, the PBOC said on its website.
  • The 7-day weighted average interbank repo rate for depository institutions (DR007) fell to 2.1000% at 09:26 am local time from the close of 2.1035% on Friday.
  • The CFETS-NEX money-market sentiment index closed at 44 on Friday vs 59 on Thursday.


The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 6.3506 on Monday, compared with 6.3306 set on Friday.


SNAPSHOT: Hope Dominates Fear In Asia

Below gives key levels of markets in the second half of the Asia-Pac session:

  • Nikkei 225 up 204.29 points at 25367.07
  • ASX 200 up 85.797 points at 7149.4
  • Shanghai Comp. down 50.224 points at 3259.523
  • JGB 10-Yr future down 15 ticks at 150.24, yield up 1bp at 0.195%
  • Aussie 10-Yr future down 5.5 ticks at 97.546, yield up 5.5bp at 2.454%
  • U.S. 10-Yr future -0-12 at 125-18, yield up 5.28bp at 2.045%
  • WTI crude down $3.12 at $106.21, Gold down $15.66 at $1972.8
  • USD/JPY up 50 pips at Y117.79

BOND SUMMARY: Cheaper In Asia, As Hope Outweighs Fear

U.S. Tsys were softer in Asia-Pac hours but operate off of worst levels ahead of European dealing. TYM2 is -0-12 at 125-18, 0-03 off the base of the 0-21 range in play overnight, while cash Tsys run 3-6bp cheaper across the curve. The 5- to 7-Year zone has led the weakening in the space. However, the cycle highs in 10-Year yields held overnight, which allowed the wider Tsy space to form a bit of a base. Early Asia trade was dominated by optimism surrounding the Russia-Ukraine discussions, with both sides pointing to the potential for an agreement in days. Still, the conflict continues, with Russia striking a facility in the west of Ukraine, near the Polish border over the weekend. The Yavoriv International Centre for Peacekeeping and Security was the target, with Russia pointing to military shipments and foreign troops gathering there. Some Western nations also identified no sign of willingness to end the war on the part of Russian President Putin in the wake of a call between the Russian, French & German leaders. Elsewhere, worry re: the COVID situation in China & HK (with the former headlined by lockdown in Shenzhen & restrictions in Shanghai) pressured mainland and Hong Kong equities, providing some light support for core FI markets. There isn’t much of note on the domestic docket on Monday (3- & 6-month bill supply), with focus on Wednesday’s FOMC. More widely, Monday will provide the latest round of Russia-Ukraine talks (set to get underway at 08:30 London). A quick reminder that U.S. clocks rolled forward over the weekend, so adjust your schedules accordingly.

  • JGB futures followed the broader swings in core global FI flows, extending on their overnight weakness early on, before finding a bit of a base, hitting the bell -15. Cash JGB trade saw some twist flattening of the curve, with the 5- to 7-Year sector leading the weakening, cheapening by a little over 1bp, while 30 & 40s have richened by around the same amount. There hasn’t really been much to move the needle when it comes to local headline flow. PM Kishida once again noted that he does not plan to hold discussions with the U.S. re: nuclear sharing matters. Elsewhere, Deputy Chief Cabinet Secretary Isozaki noted that stability in FX markets is “important,” with the government currently “watching movements” in the space as USD/JPY tagged another fresh multi-year high on Monday. Elsewhere, after hours comments from PM Kishida pointed to policies to deal with prices rises, with inflation starting to “impact the Japanese economy.”
  • A lack of real idiosyncrasies (Assistant Treasurer Sukkar flagged a budget focus on households “under strain” owing to surging inflation over the weekend and continued speculation re: outgoing RBA Deputy Governor Debelle’s successor) left the Aussie bond space at the whim of broader risk appetite, meaning that YM and XM closed -2.8 & -5.7, respectively. The 7- to 10-Year zone led the way lower in cash ACGB trade.

EQUITIES: Mixed As COVID Worry Heightens In China, Hong Kong

Major Asia-Pac equity indices are mixed at typing, with the Nikkei 225 and ASX200 advancing despite a negative lead from Wall St. On the other hand, the CSI300 and Hang Seng underperformed as worry surrounding measures to control an ongoing COVID-19 outbreak has surged, mixing with notably weak sentiment in China-based technology names.

  • The Hang Seng is 3.4% worse off at writing, plunging below 20,000 for the first time since Jun ’16. Virtually all sub-indices within the Hang Seng are in the red at writing, led by losses in the Hang Seng Properties Index, reflecting elevated worry re: the city’s pandemic management measures (Q1 new home sales and prices in Hong Kong have cratered as viewing activity and property launches have been effectively put on hold). China-based tech struggled as well, with the Hang Seng Tech dealing 6.6% softer (to hit a fresh all-time low) amidst heavy losses in large-cap names such as Alibaba (-6.9%) and Baidu Inc (-14.5%).
  • The CSI300 sits 1.6% lower at typing, as the cities of Shanghai and Shenzhen have been subjected to COVID-related social restrictions. The richly valued consumer staples and consumer discretionary sub-indices lead broader losses in the CSI300, with ~230 out of 300 constituents recording losses at writing. Discussion over the pandemic-induced drag on economic growth has also done the rounds in Asia, with participants eyeing a decline in Chinese demand for some steel and iron products.
  • Specifically on the pandemic situation in China, the country is facing its worst outbreak of COVID-19 since 2020 after reporting over 3,400 cases on Sunday.
  • U.S. e-mini equity index futures are a touch below best levels earlier in the session, dealing 0.5% to 0.7% firmer heading into European hours.

OIL: Lower In Asia

WTI is ~-$2.70 and Brent is ~-$2.10, as both benchmarks operate ~$3 above their Friday’s troughs at typing. Progress over the weekend towards a diplomatic solution re: the Russia-Ukraine conflict applied pressure to crude in Asia dealing with U.S. Deputy Secretary of State Wendy Sherman stating late on Sunday that Russia was showing “some signs of a willingness to have real, serious negotiations”.

  • To recap, WTI and Brent shed ~$6 last week to record the biggest weekly decline since November. This came as both benchmarks backed away from fresh 14-year highs made on Mar 7 as worry re: a coordinated embargo on Russian crude imports by the U.S., UK, and the EU eased, with the latter still undecided on the measure amidst strong German-led opposition, while hope grew for a diplomatic solution to the Russia-Ukraine conflict.
  • Elsewhere, hope for an Iranian nuclear deal remains in limbo, with various parties indicating over the weekend that talks were effectively on hold. While EU officials were quoted by RTRS as stating that “two or three technical issues” remain between the U.S. and Iran, uncertainty has lingered over Russia’s ability to “block” an agreement in the near-term, particularly as the U.S. has indicated an unwillingness to meet Russia’s recently-made demands.
  • From a technical perspective, resistance for WTI and Brent is seen at their Mar 11 highs of $110.29 and $113.91 respectively, while support is located at Mar 1 lows of $95.32 for WTI and $98.30 for Brent.

GOLD: Lower As Remarks Provide Hope For Russia-Ukraine Resolution “Within Days”

Gold trades ~$15/oz lower to print $1,974/oz, operating a touch above session lows at typing. The move lower was facilitated by elevated hope over the weekend re: a diplomatic resolution to the Russia-Ukraine conflict, helping to remove some of the geopolitical risk premium in the precious metal.

  • To elaborate, officials from both Russia and Ukraine expressed optimism on Sunday for “concrete results” and “documents to be signed” within “a few days”. The statements come after Russian President Putin noted “positive shifts” in talks on Friday, while both sides have revealed that they have been having “continuous” discussions through video calls over the weekend. Looking ahead, focus will turn to a fresh round of negotiations via videoconferencing, due to take place on Monday (touted to get underway at 0830 GMT).
  • A reminder that these developments come sharp on the heels of “high-level” talks between the FMs of Russia and Ukraine last Thursday, with Ukrainian FM Kuleba later describing that meeting as having made “zero progress”. There are also signs of potential escalation in the conflict, with reports pointing to Russian President Putin approving the participation of up to 16’000 volunteer fighters from the Middle East, to be deployed alongside Ukrainian separatist forces in the Donbas.
  • In terms of technical levels, support for gold is situated at $1,958.8/oz (Mar 11 low), while resistance is eyed at $1,999.1/oz (Mar 11 high).

FOREX: Yen Prints Fresh Cycle Lows, PBOC Shows Contentment With Yuan Depreciation

Hopes for progress in diplomatic talks between Russia and Ukraine prevailed, with envoys preparing for further negotiations via a video link today. The prospect of continued dialogue seemingly outweighed developments on the ground, where Russian troops fired a barrage of missiles on a Ukrainian military base near the border with NATO member Poland. The euro and Scandinavian currencies led gains in G10 FX space, albeit weaker crude oil prices limited the Norwegian krone's gains.

  • Russian rouble was indicated higher in offshore trade, despite mounting evidence that Western sanctions are taking their toll. Local equity markets will remain shut this week, while Moscow threatened to pay interest to foreign creditors in roubles, even on bonds without such optionality, raising the prospect of a default.
  • Asia headline flow was dominated by worsening Covid-19 situation in mainland China and Hong Kong, with the tech hub of Shenzhen placed under a snap lockdown. The yuan lost ground in the wake of its sharp sell-off in the previous trading session, while the PBOC played ball through a display of weak bias in daily yuan fixing. China's central bank set yuan reference rate at CNH6.3506, 150 pips above sell-side estimate.
  • The yuan's troubles in conjunction with weaker crude oil prices sapped strength from the Antipodeans, which are heading for the London session sitting near the bottom of the G10 pile. The Aussie was particularly hard hit, with AUD/USD testing support from Mar 8 low of $0.7245.
  • The greenback advanced on the back of higher U.S. Tsy yields. This dynamic amplified pressure to the yen, amid reduced demand for safe havens, allowing USD/JPY to lodge a fresh multi-year high just a handful of pips shy of the 118.00 mark. Note that both the Fed and the BoJ will deliver their monetary policy decisions this week, but only the former is expected to tighten policy.
  • It is a quiet start to the week in terms of data releases, with Swedish CPI coming up in European hours. Any fallout from Russo-Ukrainian talks and a separate meeting between top-level U.S. and Chinese officials may provide some interest.

FOREX OPTIONS: Expiries for Mar14 NY cut 1000ET (Source DTCC)

  • EUR/USD: $1.0900(E1.4bln), $1.1000(E1.5bln), $1.1050-60(E1.2bln)
  • USD/JPY: Y115.85-00($1.2bln)
  • EUR/GBP: Gbp0.8350-70(E535mln)
  • EUR/JPY: Y126.50(E677mln), Y129.00-15(E612mln)
  • AUD/USD: $0.7200(A$618mln)

UP TODAY (Times GMT/Local)

14/03/20220700/0800***SE Inflation report
14/03/20220745/0845*FR Foreign Trade
14/03/20220745/0845*FR Current Account
14/03/20221000/1100EU ECB Elderson Speech at European Banking Institute
14/03/2022-EU ECB Lagarde & Panetta at Eurogroup Meeting
14/03/20221500/1100**US NY Fed survey of consumer expectations
14/03/20221530/1130*US US Treasury Auction Result for 26 Week Bill
14/03/20221530/1130*US US Treasury Auction Result for 13 Week Bill
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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