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Russian sanctions

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The EU leaders' summit decided to extend sanctions on Russia for a further six months. This may be in defiance of Trump's sympathies, and it challenges the assumptions of some in the markets that a more lenient economic approach to Russia was going to emerge from global politics post-November.
  • The EU leaders-that-are-left summit meets today, with UK PM May told to sit on her own in the naughty corner. Discussions about the UK's exit are likely to yield little other than a pledge of a unified approach, which the British will no doubt do their best to undermine.
  • Euro area final consumer price inflation is due; this is hardly likely to surprise. Rather, the data serves as a confirmation of the rising inflation pressures – through oil, but more importantly in underlying labor cost pressures. Euro area core inflation rates have an extremely low correlation, suggesting divergent local inflation pressures.
  • The US dollar has stabilized near its highs after the post-Fed flurry of interest. As a reaction to the move in the cursed dots of Fed forecasts, this seems excessive. Markets chose to ignore Yellen's warnings on the topic and instead were mesmerized by the pretty patterns of the dot plot chart.