Sanctions, and global supply

Daily update

China’s response to the Ukraine war is a focus. Media reports suggest the US believes China is “open to” supplying military equipment to Russia. China’s foreign minister said the country does not want to incur international sanctions. These are not consistent—which matters to markets. Sanctions against Russia have a limited impact—it is not a significant economy and lies at the start of global supply chains. China is a more significant economy and lies at the end of global supply chains, so sanctions would matter more.
US producer price inflation for February is pre-war data. It does reflect corporate pricing power. The year-over-year rate looks back to a time when almost all the US was still in lockdown. The month-on-month rate shows recent pricing pressures, but is distorted by seasonal adjustment.
China’s industrial production data again shows global supply chains are not shattered ruins—but instead supplying record amounts of stuff. The numbers were strong. March lockdowns may impact Chinese supply somewhat, but today’s lockdowns are not as severe as in 2020.
UK labor market data showed lower unemployment (tight labor market) and increased participation (flexible labor market). Wage increases were modest. Germany’s ZEW sentiment survey is due. ECB President Lagarde will, of course, be speaking.