RUSSIA: Kremlin Offers No Response To Claims On 28-Point Ukraine Peace Plan
Kremlin spox Dmitry Peskov, speaking to reporters, says that Russia has "nothing new to say in addition to what was said at the Putin-Trump summit in Alaska". Comes in the aftermath of Axios' report earlier in the week claiming that the US and Russia were working on a 28-point peace plan for Ukraine that effectively removes Kyiv, as well as Ukraine's European allies, from the decision-making process. Asked whether President Vladimir Putin has been briefed on the plan, Peskov says he has nothing to add to the matter.
- Peskov says there are no consultations between the US and Russia, but "contacts are ongoing."
- The Economist reports that the draft, supposedly overseen by White House special envoy Steve Witkoff and Russia's Presidential Envoy Kirill Dmitriev, "appears to be little short of a demand for capitulation. Sources familiar with the document say it checks off many of the maximalist demands familiar from earlier Russian proposals, and adds a few more."
- FT reports that these include Ukraine ceding the Donbas, cutting its armed forces in half, abandoning key defensive military equipment, recognising Russian as an official state language, and banning the presence of foreign troops.
- The White House has refused to be drawn on the nature of the plan. However, on 19 Nov, Witkoff appeared to have accidentally posted a public reply on X, claiming in response to Axios reporter Barak Ravid's story, "He must have got this from K...", seen as likely referring to Dmitriev.
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LOOK AHEAD: Tuesday Data Calendar: Philly Fed Non Mfg, Redbook Retail Sales
- US Data/Speaker Calendar (prior, estimate)
- 10/21 0830 Philadelphia Fed Non-Mfg Activity (-12.3, --)
- 10/21 0855 Redbook Retail Sales Index
- 10/21 1130 US Tsy $95B 6W bill auction
- Source: Bloomberg Finance L.P. / MNI
FRANCE: Macron Re-iterates That Pension Reform Referendum A Possibility
Note these headlines from ~15 mins ago from French President Macron:
- " FRENCH PRESIDENT MACRON: PENSION REFORM THAT HAD BEEN VOTED UPON WAS NECESSARY FOR THE COUNTRY" Reuters
- "FRENCH PRESIDENT MACRON: WE NEED MOMENT OF STABILITY REGARDING PENSION REFORM DEBATE" Reuters
- "FRENCH PRESIDENT MACRON REITERATES THAT A REFERENDUM ON PENSION REFORM REMAINS A POSSIBILITY" Reuters
A reminder that as a concession to the Socialist party, PM Lecornu announced a temporary suspension of pension reform until the next Presidential election in 2027.
ECB: ETS2 Delay Could Bring Forward Rate Cut Expectations
The fall in EUR traded inflation metrics through October has been one contributor to recent dovish ECB repricing. For some Governing Council members, the downward impact that a delay to ETS2 would have on the ECB’s December inflation projections could be enough to support another rate cut.
- If an ETS2 delay to 2030 is confirmed, there may be scope for ECB-dated OIS to increase the implied probability of a cut in December (3.5bps of cuts priced) or March (12bps of cumulative cuts priced). However, we don’t expect it to drive a material repricing of terminal rate expectations for now.
- The expected introduction of ETS2 in 2027 is currently pushing up the ECB’s headline inflation projections towards the 2% target. A delay would mechanically lower the 2027, and likely 2028, projections at the December projection round.
- Last week, ECB’s Simkus noted that “For me, the forecast for inflation in 2028 will be an important piece of information for the decision in December,”..... “If it’s more than marginally below the target, we should act on that.”
- However, it’s unclear how much stock some of the more centrist/hawkish ECB officials are putting into the impact of ETS2. Whether the change is delayed or not, it would just impact the timing of a one-time price level shift, and have limited impact on the medium-term underlying inflation outlook. ECB’s de Guindos said at last month's MNI Connect Event that “We can speculate what's going to happen with ETS2 whether it will be there or not but I don't tend to pay much attention to this kind of very concrete and specific developments that can give rise to the opposite movement in inflation for the year or the year after."
- Last week, Belgian CB Governor Wunsch (considered hawkish leaning) said that he would not get “nervous when inflation deviates by 10, 20, 30 basis points from the target".
