The EU races to secure an oil deal
Countries are in defense mode against the greenback
Russia remains defiant at the UN
You can expect more pain from central banks
European Union member states are racing to clinch a political agreement within weeks that would impose a price cap on Russian oil. The push has gained steam since President Vladimir Putin announced a “partial mobilization” of troops in an escalation of Russia’s war in Ukraine and will likely feature as part of a new a package of sanctions to be proposed by the European Commission, according to people familiar with the matter. A cap would align the EU with a US effort to keep the cost of crude from soaring and to hit Moscow’s revenue.
Nations are being forced to go it alone in erecting defenses against the relentless strength of the almighty greenback, with no sign that governments are willing to act in concert. Fueled by hawkish Federal Reserve policy, US economic strength and investors in search of a haven from market swoons, the greenback is surging relentlessly against counterparts big and small by the most in decades. An ever-stronger US dollar leaves policy makers from Tokyo to Santiago in near-constant firefighting mode to mitigate its damage to their economies. Japan has become the latest major country to step into the fray.
The UN Security Council gave Russia’s Foreign Minister Sergei Lavrov an icy reception when he went before it to defend his nation’s invasion of Ukraine. The veteran diplomat made sure he didn’t stick around to hear the criticism. In a show of defiance toward Western condemnation, Lavrov arrived well after the council opened a special meeting to discuss the Ukraine conflict on Thursday. He gave his speech — accusing the West of forcing Russia to invade in order to protect itself — and then walked out. Moscow has still struggled to marshal support outside the Security Council in the General Assembly, where numerous countries abstained from condemning Russia in an earlier UN resolution.
Not Over Yet
This week’s blitz of interest rate hikes is unlikely to mark the end of a campaign by central banks to crush inflation, even as they run the mounting risk of driving their economies into recession. From Ulaanbaatar to Washington, many policy makers lifted their benchmark borrowing costs during a three-day window that made clear their chief worry is the strongest run of inflation since the 1980s. That marks a dramatic change from a year ago, when officials were publicly predicting the pandemic-era spike in prices would soon fade.
European stock futures pointed to a muted start as peers in Asia were headed for a sixth weekly decline on Friday, on expectations for tighter monetary policy and a slowing global economy. The UK government’s set to deliver a “mini budget,” while earnings include Juventus and Smiths Group. Data will include Netherlands and Spain GDP figures, and UK consumer confidence.
(Source: Bloomberg, Sept. 23-2022)