This week saw Russia step up their moves into Ukraine with heavier attacks on key cities. The West responded with even tougher sanctions. Oil kept finding buyers on dips as supply issues arose over fears Russia would limit its oil exports. Equity falls were milder at the start of this week as longer-term investors know that the dips in equities may be quickly bought. Historically geopolitical events have relatively mild impacts on stocks. The RBA met this week and the Board appear to be at a turning point before they turn more bullish. It is not unreasonable to expect the RBA to start hiking rates this year, depending on Russian risk.

Other key events from the past week

  • Oil: US oil surges past $100, Mar 02: US oil soars over $100 on Russian supply concerns. High oil prices only increase inflationary pressures across the world. Stagflationary fears have been further stoked this week by rising oil prices and gold will be a key beneficiary in a stagflationary environment.
  • AUD: Interest rate statement, Mar 01: The latest RBA statement shows a board at a bullish turning point as they forecast inflation within their target range into 2023. Read my latest analysis here to see why the RBA appears to have reached a critical turning point.
  • CAD: Interest rate statement, Mar 01: The Bank of Canada did deliver on a 25bps rate hike this week and also expects interest rates will need to rise further to contain higher inflation. There were few surprises in the meeting, but on balance, it was tilted more to the hawkish side. The next BoC meeting’s on April 13.

Key events for the coming week

  • EUR: Interest rate statement, Mar 10: The high inflation reading, at 5.8% y/y, last week will be a cause of concern for the ECB. However, if the Russian conflict remains front and centre the ECB will be less likely to firmly signal a rate hike for this year. How will the ECB respond to Russian risk at their rate meeting?
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  • USD: University of Michigan Sentiment, Mar 11: The UoM print is important in gauging how confident the US consumer is feeling. If the print shows another move lower this will increase concerns that the US is heading into a slow growth, low inflation, and stagflationary environment.