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"jaw-jaw" more than "war-war"

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  • Russia has stopped its exercises on the Ukrainian border, giving a boost to Russian markets and impacting foreign exchange. However, it is probably "jaw-jaw" not "war-war" that should matter to markets, with events away from the Ukraine more pertinent.
  • Market participants are rarely expert military tacticians, and even economists have limits to the extent of their knowledge. In economic terms it is the threat of sanctions that has most impact, and so market attention should be directed on Brussels, Washington and perhaps London rather than the Ukrainian border.
  • Yesterday's US data seemed to confirm the impact of weather as the dominant damaging factor for US data earlier this year, with sentiment doing better than expected. The Senate is to hold hearings into three Fed nominees, including Stanley Fischer (perhaps the most powerful nominee for Vice Chair in the Fed's history).
  • Japanese wages were a little weak in January, but attention is likely to focus on the March pay round anyway. The Reserve Bank of Australia left interest rates unchanged, but did comment that the Australian dollar was "historically" high (though that is a less dovish comment than the earlier "uncomfortably" high).
 
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