US-RUSSIA: Treasury Announces New Measures On Russia To Curb Sanctions Evasion
The US Treasury Department has announced a raft of new sanctions on financial institutions determined to aid Russia in evading US-led sanctions or supporting Russia's military-industrial base.
- The measures are part of a major push by the Biden administration to harden rules against Russia and China before President-elect Donald Trump takes office next week. Other measures announced include strict sanctions on Russia's energy sector and an expansion of export controls on semiconductors related to AI to China.
- A Treasury statement notes: "This action targets a sanctions evasion scheme established between actors in Russia and the People’s Republic of China (PRC) to facilitate cross-border payments for sensitive goods."
- The statement adds: "Today’s sanctions also include dozens of companies across multiple countries that continue to support Russia’s efforts to evade U.S. sanctions, particularly in the PRC, which remains the largest supplier of dual use items and enabler of sanctions evasion in support of Russia’s war effort."
- Deputy Treasury Secretary Wally Adeyemo said in a statement: “Today’s actions frustrate the Kremlin’s ability to circumvent our sanctions and get access to the goods they need to build weapons for their war of choice in Ukraine. Today’s expansion of mandatory secondary sanctions will reduce Russia’s access to revenue and goods.”
- The Treasury Dept notes: "...foreign financial institutions that conduct or facilitate significant transactions or provide any service involving Russia’s military-industrial base... run the risk of being sanctioned by [Office of Foreign Assets Control]."
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US: GOP Eyes Health Care For Savings To Fund Extension Of Trump Tax Cuts
Senator Chuck Grassley (R-IA) said in an interview with Axios that health care could be targeted for savings as the incoming administration of US President-elect Donald Trump looks to fund the extension of Trump’s first-term tax cuts, expected to cost upward of USD$4 trillion over 10 years.
- Grassley told Axios: "I think we're going to look for savings wherever we can, and that might include health issues… [T]he fiscal situation of this country is very serious. There's hardly anything except Social Security and Medicare that can't be on the table."
- Axios writes: “The biggest savers generally fall into three categories: 1. Health care reforms, 2. Social Security cuts, 3. Tax increases.” Brian Blase, a former Trump administration health official, noted: "The second and the third are off-limits.”
- Blase added: "We have two dozen or more health options for Congress to consider that would reduce overpayments to hospitals, reduce overpayments to insurers, reduce overpayments to states — there's so many inefficiencies in our health sector… If you want to reduce federal spending, the health care entitlement programs are where you have to go.”
- Axios notes: “You'd be hard-pressed to find a Republican who thinks that Democrats' enhanced subsidies for the [Affordable Care Act]'s health insurance marketplace plans should be extended on their merits. But you'd also struggle to find an observer who has completely ruled out the possibility of it happening anyway.”
BONDS: CAD Rates Move Underappreciated Driver Of Pull Away From Session Highs
Weakness in CAD bonds detailed by our North America FI team (after political and fiscal uncertainty became more evident in Canada) probably an overlooked factor when it came to the pre-U.S. PMI pull away from session highs in both Tsys and gilts.
- EGBs proving a little more resilient.
ECB: Wunsch Sees Little Risk Of Inflation Undershoot
Generally considered a hawkish-leaning member of the Governing Council, Wunsch joins colleagues in calling for the removal of policy restriction
- His comments around inflation risks suggests he is unlikely to support a move below neutral at this stage, though:
- "I don’t think the risk of undershooting the inflation target has increased lately because services inflation remains quite high,”
- "While I buy the argument that there is now a slowdown in growth dynamics, when you have wage growth of 5.4% like we had in the third quarter, I don’t see inflation falling to close to zero after that"
