Daily update
Daily update
- The Chinese city of Shenzhen is in a week-long COVID-19 lockdown. International consumers are unlikely to notice; production will shift, and any delay is roughly the difference between free delivery with Amazon Prime and free delivery without Amazon Prime. However, markets do seem to be nervous about the effectiveness of the zero-tolerance policy, and the potential for future disruption.
- The IMF says a Russian default is “no longer improbable”. International reactions to the 2014 Crimean invasion, and generally low levels of borrowing, mean this is unlikely to trigger a systemic problem. Russia’s finance minister said half the country’s foreign exchange reserves have been frozen by sanctions. The other half are also affected as global banks are prevented from dealing with the Russian government.
- Markets await Wednesday’s Federal Reserve decision. There is little a central bank can do about commodity prices—Fed Chair Powell can hardly dig an oil well in the middle of Washington D.C. The concern will be about second-round effects—prices encouraging higher wage costs. The Atlanta Fed data last week did show a sharp increase in wages (not quite the same thing as wage costs).
- The data calendar is otherwise very quiet, with some generally pre-war (or pre-war impact) price data from Europe.
