However, a removal of the need to normalize monetary policy isn't ING strategists' base case. "We suspect this won't be the case, but it will take time to answer that question," they said. At the ECB's meeting this week, the strategists expect the ECB to play it safe, adding that the rise in systemic risk indicators shows that the impact of escalating geopolitical tensions isn't yet known.
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The prospect of higher defense and energy infrastructure expenditures might help with growth over the medium to long term, and it suggests that risks are broadly skewed to the upside on funding and issuance in the eurozone government bond market, Barclays's rates strategists said. Risks are biased higher for EUR rates, they said.
This is especially the case given the market has already priced out a significant amount of interest rates rises from the EUR curve, they added.
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Euro corporate bonds which are eligible for purchase by the ECB are likely to outperform as investors brace for the impact of a possible Western ban on oil imports from Russia, said UniCredit's research team.
"Similar to what we have observed since the outbreak of the Russia-Ukraine crisis - investment grade paper, notably Corporate Sector Purchase Program-eligible bonds are likely to outperform," analysts at the Italian bank said.
Commodities:
Oil prices rose to their highest level since 2008 after the U.S. said it and some European countries were considering a ban on Russian oil imports. Brent crude oil jumps almost 8%. It had earlier risen as high as $130 a barrel for the first time since mid-2008. U.S.
Secretary of State Antony Blinken said Sunday that there were "very active discussion[s]" about the step.
Cutting off Russia's sizable oil exports could weigh on U.S. growth and push Europe into a recession, wealth manager Exinity said.
"If the crisis gets worse and Europe imposes sanctions on Russian oil with no response from OPEC members, expect prices to jump above $200," the firm said.
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Gold prices pushed past $2,000 a troy ounce for the first time in 18 months as investors turn to safe-haven assets because of the Russia-Ukraine conflict. "Gold is a viable hedge for war and should continue to trend higher through both the inflation and geopolitical risk," SPI Asset Management said.
The U.S. is considering banning Russian oil imports, something which has heightened investors' concerns about the conflict's possible hit to global economic growth.
Gold might struggle to rise much above its current level, however, and should the Russian central bank choose to sell its large gold holdings, prices could also come under pressure, the firm said.
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Nickel prices soared as traders fear Western nations could seek to target Russia's metal exports with sanctions following its invasion of Ukraine.
Benchmark three-month nickel on the LME surged over 26% to $36,765 a metric ton, its highest level since 2008.The U.S. said Sunday that together with some European nations it was considering banning imports of Russian oil. That has raised fears that Russia's metal exports could be next, said brokerage Marex.
"The ceiling seems to be missing, and markets are trading as if there is a lot of panic," the firm said. Other metals are also rallying, with copper up 1.9% at $10,796 a ton and aluminum up 4.9% at $4,028 a ton.
EMEA HEADLINES
Russia Pummels Ukrainian Civilian Targets Ahead of Talks
LVIV, Ukraine-Russia pursued a pressure campaign in its invasion of Ukraine with nighttime strikes on civilian targets as the war entered its 12th day, while Kyiv's military held fast along several fronts ahead of planned cease-fire talks.
Continuing their encirclement operations on Ukrainian cities, Russian forces prevented civilians from escaping via humanitarian corridors and shelled urban centers in the country's north and south. Ukrainian forces continued to frustrate Russia with counterattack and sabotage operations.
The ECB's Inflation Problem Is More About Supply Than Demand
U.S. and European central bankers both confront inflation problems, but with different roots that could lead the Americans to raise interest rates more and to a higher level than their continental counterparts.
German Manufacturing Orders Rose in January, Beating Forecasts
German manufacturing orders increased in January, beating expectations amid continuing supply-chain disruptions.
Manufacturing orders rose 1.8% on month in January in adjusted terms, following a revised 3.0% increase in December, according to data from federal statistics office Destatis released Monday.
Austria's OMV Expects EUR1.5B-EUR1.8B Hit as It Cuts Down on Russian Business
OMV AG said Saturday that it is further reviewing its activities in Russia because of the country's war in Ukraine, which would lead to a 1.5 billion euro to 1.8 billion euro ($1.64 billion-$1.97 billion) hit for the oil-and-gas company.
Austria-based OMV said that Russia will no longer be considered one of the core regions of its exploration and production portfolio, and that it won't pursue future investments in the country.
Iran Nuclear Deal Threatened by Russian Demands Over Ukraine Sanctions
Fresh demands from Russia threatened to derail talks to restore the 2015 Iran nuclear deal, as Moscow said it wanted written guarantees that Ukraine-related sanctions won't prevent it from trading broadly with Tehran under a revived pact.
The demands, made by Russian Foreign Minister Sergei Lavrov on Saturday and dismissed by U.S. officials on Sunday, came as Western and Iranian officials said they were near to reaching a deal to restore the nuclear pact, which lifted most international sanctions on Iran in exchange for tight but temporary restrictions on Tehran's nuclear programs.
Sanctions on Russia Put Private Fund Backers Under the Microscope
Private investment firms are scouring the lists of their fund investors to ensure they don't run afoul of new sanctions against Russian oligarchs, government officials and others in response to their country's invasion of Ukraine.
For smaller firms that might lack the expertise, technology and money needed to conduct thorough background checks of their investors, particularly wealthy individuals and family offices, the new sanctions represent a significant challenge, lawyers, consultants and former regulators say. Identifying sanctions targets can be tricky.
This Russian Metals Giant Might Be Too Big to Sanction
From its base at a former Arctic gulag, Russia's MMC Norilsk Nickel PJSC digs up a large portion of two metals that are essential to greener transport and computer chips.
So far the U.S. and its allies haven't sanctioned the company, or its oligarch chief executive, underscoring the dilemma some analysts say governments face in seeking to punish Russia without hurting their own access to key commodities.
Rio Tinto Settles Mozambique Coal Impairment Case With Australian Regulator
Rio Tinto PLC said Monday that it has reached a settlement with the Australian Securities and Investments Commission over the timing of a 2013 impairment disclosure against Mozambique coal assets it used to own.
The mining company said it will pay 750,000 Australian dollars (US$553,000) for contravening its continuous disclosure obligations between Dec. 21, 2012, and Jan. 17, 2013, immediately before it announced a roughly US$3 billion impairment against the value of the Mozambique business.
Russia Permits Payments to Foreign Bondholders, but Only With Rubles
Russia will allow borrowers to make payments on their overseas debt, but only using rubles even for bonds denominated in foreign currencies.
Making debt payments in the ruble, which has lost almost 40% of its value this year, could still leave Russia and its companies in default on dollar-denominated debt.
GLOBAL NEWS
U.S. Treasurys Regain Favor
Russia's invasion of Ukraine and hints of slowing wage growth have driven money back into U.S. government bonds in recent days, dragging down longer-term interest rates and providing some relief to investors buffeted by declines in riskier assets.
Yields on U.S. government bonds, which fall when bond prices rise, dropped last week in two big bursts-early on when investors reacted to a nuclear threat from Russia President Vladimir Putin and then on Friday, after data showed a smaller-than-expected increase in workers' average hourly earnings.
Dollar Strength Builds as Ukraine War Deepens
Escalating conflict between Russia and Ukraine has sent investors dashing to safer assets, propelling the dollar to its highest level since the coronavirus-induced volatility of two years ago.
The ICE U.S. Dollar index, which tracks the currency against a basket of others, surged as high as 98.92 this past week, its highest level since May 2020. It finished the week with a 2.1% jump, one of the largest in the past five years.
Oil Tops $130 a Barrel as Russian Attacks Escalate
Oil buyers racing to replace Russia' taboo crude are paying record premiums for barrels that can be delivered now rather than later, reflecting worries about adequate near-term fuel supplies and expectations that high prices will reduce consumption and encourage drilling.
Prices for April deliveries of crude have shot up since Russia invaded Ukraine and buyers began shunning the aggressor's oil exports. The main U.S. price last week topped $110 a barrel for the first time in more than a decade and in off-hours trading late Sunday, they burst above $130 following fresh attacks, mounting civilian casualties and a push by U.S. lawmakers to ban Russian oil imports.
U.S. Officials Meet With Regime in Venezuela, to Discuss Oil Exports to Replace Russia's
The Biden administration is seeking to ease oil sanctions on Venezuela as part of a broader U.S. strategy to temper oil prices that have skyrocketed because of Russia's war in Ukraine, according to people familiar with the matter.
(MORE TO FOLLOW) Dow Jones Newswires
03-07-22 0622ET
