RUSSIA: Spy Chief-'Poland & Baltics First To Suffer In Event Of NATO Aggression'
State-run TASS reports comments from Sergey Naryshkin, Director of the Foreign Intelligence Service. Says "Russia and Belarus see NATO increasing military activity near their borders, [and] European countries are increasing the level of escalation around Ukraine." Says that Russia will act 'preemptively' given the escalation, adding "Poland and the Baltics must understand that they will be the first to suffer in the event of NATO aggression against the Union State [Russia and Belarus]"
- Poland, Finland and the Baltic States (Estonia, Latvia, Lithuania) have all recently announced their withdrawal from the Ottawa Convention, which bans the use of anti-personnel landmines, highlighting the severity with which each capital views the threat of a conventional land invasion from the east.
- On 14 April it was confirmed that the EU is working on its 17th sanctions package against Russia, while UK-Russia tensions have spiked further after Russia's ambassador Andrei Kelin refused to deny that Russian sensors were in UK waters seeking to track British nuclear submarines.
- Naryshkin on the energy infrastructure ceasefire: "Russia is fully fulfilling its obligations, but the same cannot be said of the Ukrainian army. Moreover, attacks are carried out on Russian energy infrastructure facilities almost every day".
- Naryshkin: "A peaceful solution in Ukraine implies its non-nuclear status, the abolition of discriminatory laws and recognition of the sovereignty of the Russian Federation's borders"
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FED: March Economic Projections: Higher Inflation, Weaker Growth, Same Rates
The MNI Markets Team’s expectations for the updated Economic Projections in the March SEP are below.
- The unemployment rate is likely to rise slightly for 2025 alongside a downgrade in GDP growth, while the 2025 core and headline PCE inflation projections are set to rise again. Changes to later years will likely be limited, however.
- More detail on the shift in Fed funds rate medians is in our meeting preview - we will add more color next week.
FED: Market Pricing Nearly 3 2025 Cuts As Conditions Tighten
Amid rising government policy uncertainty, sentiment among businesses and consumers has fallen sharply since the start of the year, while equities and the dollar have reversed their post-election rise. Overall, financial conditions have tightened, even if stress is not yet mounting, e.g. no major widening of credit spreads (the accompanying chart shows the Fed’s financial conditions impulse index but only through January).
- Combined with growth fears, this has affected expectations for the Fed’s rate path, with around 18bp more cuts expected in 2025 compared with what was seen after the January FOMC. 65bp of cuts are priced for the year as a whole. 2025 cut pricing reached 71bp before the February inflation data and 76bp before the February payrolls report.
- A rate cut is seen with near zero probability for March’s meeting, but the first full cut is just about priced for June, with a second nearly priced by September.
- Chair Powell has no reason to endorse or refute these expectations – he’s likely to be happy with a press conference that ends with little discernable change in pricing.
CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
- CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
