February 16. Inflation in the UK has reached an almost 30-year high of 5.5% UK consumer prices rose at their fastest annual pace in nearly 30 years in January, putting more pressure on households and increasing the chances that the Bank of England will raise interest rates for the third consecutive meeting. Since December, the regulator has already raised interest rates twice: from 0.1% to 0.5%. Analysts expect that the rate may be increased to 0.75% or 1% as early as March. According to the Office for National Statistics, the annual rate of consumer price inflation rose to 5.5% – the highest level since March 1992. Analysts predicted that inflation would remain at the December 5.4% level. Core inflation (excluding volatile prices for energy, food, alcohol and tobacco) rose to 4.4% in January from 4.2% in December, which is the highest since 1997. Earlier this month, the Bank of England revised its inflation forecasts and assumed that inflation would peak at around 7.25% in April (amid a 54% increase in electricity costs). High energy prices have so far been the strongest contributor to rising inflation in the UK, although supply chain problems have also driven up prices for many other goods. The British central bank does not expect inflation to return to the 2% target until early 2024, although most economists believe that inflation will still fall faster. The UK is not alone in the sharp rise in the cost of living. Consumer price inflation in the US reached a 40-year high of 7.5% in January, while inflation in the eurozone was 5.1% (which is the highest since the creation of the single European currency).
February 17. Oil prices are highly volatile on news of negotiations with Iran On Thursday, the price of oil accelerated its decline amid expectations that the United States and Iran will soon be able to return to a nuclear deal that will allow Iranian oil to come back to the world market. April Brent futures declined during the day to the level of $91.40 per barrel, recovering later to $93.35. WTI crude oil fell to $90.30, also recovering during the day to $93.15 per barrel. Yesterday it became known that the parties in the negotiations on the nuclear program are «closer to an agreement than ever.» This was stated by the chief negotiator from Tehran, Ali Bagheri Kani, on Twitter. In addition, Iran and South Korea held a meeting of representatives of oil refining companies to discuss possible supplies, which suggests that Iran is definitely preparing the ground for a return to the market. Experts note that the positive dynamics of negotiations between the United States and Iran somewhat calms the oil market. And although there is no agreement yet, prices are declining on the news of progress in negotiations and expectations of a potential return to the oil market in the amount of up to 900 thousand barrels per day by December. At the same time, today oil prices are supported by another increase in geopolitical tensions due to the situation on the Ukrainian border. The White House said yesterday that Russia had increased the concentration of troops on the border by an additional 7 thousand people.
February 22. Germany decided to block Nord Stream 2 German Chancellor Olaf Scholz announced the suspension of the Nord Stream-2 certification after Russia recognized the independence of the Donetsk and Lugansk People's Republics (DPR and LPR). In addition to the announcement of the blocking of the project, Scholz announced a decision on the first package of additional sanctions against Moscow. Against the background of this news, the cost of gas in Europe has started to rise sharply. The current quotes of «blue fuel» are again located near the level of $1,000 per thousand cubic meters. Recall that the Nord Stream-2 gas pipeline was planned to be put into operation at the end of 2019. At the same time, Ukraine, Poland, the Baltic states, as well as many European countries opposed the new supply route. Opponents of this Russian project have repeatedly stated that the gas pipeline is not an economic project, but a geopolitical lever of Russia's influence on Ukraine. However, Russia has repeatedly denied these claims, emphasizing the need for reliable gas supplies to European countries, which the Ukrainian gas transportation system cannot provide. In September 2021, the pipeline was fully completed, after which an application for certification was submitted. However, today Germany still refused the certification process against the background of a sharp deterioration in the geopolitical situation on the border with Ukraine. At the same time, Russia doubts that the European Union will be able to survive without Russian fuel: with such a policy, Europeans will have to pay about 2,000 euros per thousand cubic meters of gas. February 21. Bitcoin collapsed below $38 thousand The value of the most popular cryptocurrency collapsed again on Monday, reaching $37,400. Bitcoin and other cryptocurrencies have been under pressure lately mainly due to the situation around Ukraine. However, the impetus for a sharp drop in the exchange rate today was the news of an attack on the OpenSea NFT exchange, as a result of which attackers stole hundreds of non-interchangeable tokens with a total value of more than $1.7 million. However, the OpenSea platform itself stated that it was not hacked, and users were attacked by scammers and gave them their tokens themselves. «As far as we can tell, this is a phishing attack. We don't think it's related to the OpenSea website,» OpenSea Executive Director Devin Finzer said. As a result of today's collapse in prices, the capitalization of the cryptocurrency market fell by about $70 billion per day. During the day, the value of bitcoin recovered somewhat – to the level of $39200. Ethereum, the second largest cryptocurrency by capitalization in the world, dropped by about 3% to $2,666. Other popular digital currencies, such as BNB, XRP and Cardano, lost about 5% in price on average.
February 24. Brent exceeded $101 on the news about the military operation in Ukraine On Thursday morning, the price of benchmark oil is steadily rising amid the escalation of the military situation in eastern Ukraine. In particular, April Brent futures rose today to $101.27 per barrel, updating the highs since September 2014. Futures for North American WTI crude oil rose to the level of $96.84 per barrel. Today it became known that Russian President Vladimir Putin announced the decision to conduct a special military operation in connection with the situation in Donbass in order to protect the residents of the DPR and LPR. President of Ukraine Volodymyr Zelensky, in turn, announced the introduction of martial law throughout the country. Experts note that the military conflict significantly increases the risks of interruptions in Russian oil supplies and the introduction of diverse sanctions. At the same time, the US authorities announced that they are considering the option of re-selling oil from the country's strategic reserves (SPR) if prices for these energy resources rise sharply «as a result of Russian aggression.» At the end of 2021, the United States already resorted to selling oil from the SPR (about 70 million barrels). This was done in coordination with other major players in the market.
February 25. What is the risk of the Ukrainian crisis for investors? Since the beginning of 2022, the main «headache» of investors has been the return of volatility to the market: the oil market is showing growth to multi-year highs, as well as gold, stocks and indices are rising and falling, and the crypto market has reached a minimum where bitcoin can no longer serve as a reliable «safe haven asset». At the same time, investors have been worried about another news in recent days – Russia's invasion of the territory of Ukraine, which led to a fall in the ruble exchange rate and the suspension of the Moscow Stock Exchange. Analysts are closely monitoring the development of events and advise only one thing so far – not to give in to panic. «Although Russia and Ukraine will dominate the news in the near future, they will not determine the medium– and long-term direction of the market,» says Tom Essey, founder of the newsletter The Sevens Report. The United States and its allies have so far announced a modest first stage of sanctions, to which the market reacted rather restrainedly. However, in the event of an escalation of the conflict, consumers and companies may refrain from loans, which will undoubtedly hit the banks. In addition, the shares of the tourism sector and the leisure sector may suffer, since during global crises, customers are usually not interested in travel and entertainment. Analysts believe that US Treasury bonds and Japanese government bonds may become the most resistant to the shock. Experts also suggest that the investment portfolio is likely to suffer due to a possible tightening of the policy of central banks and a slowdown in economic growth, and not because of the Ukrainian conflict itself.
March 1. Oil continues to rise in price The price of oil continues to rise on Tuesday amid the continuation of military operations on the territory of Ukraine. Prices are increasing, even despite reports from the United States about the further release of oil from strategic reserves. As it became known, the United States and other members of the International Energy Agency (IEA) may soon decide to release about 70 million barrels of oil from reserves. An emergency meeting of the organization will be held today. However, analysts believe that any release of oil from reserves will only be a short-term solution, especially if the supply of raw materials from Russia decreases. Warren Patterson, who is responsible for commodity markets strategy at ING Groep NV, said that it is unlikely that today's market expects a significant change in Russian exports, which suggests the likelihood of an even greater price increase in the event of a deterioration in the situation in Ukraine. The current Brent quote is $100.17 per barrel. The price of WTI oil futures is hovering around $97.40 per barrel. February 28. China does not intend to stop trade cooperation with Russia The Ministry of Foreign Affairs of China has announced its intention to continue mutually beneficial trade cooperation with Russia. The country has no plans to join the Western sanctions imposed in response to Russia's special operation in the Donbas. The United Kingdom, the European Union, the United States and Canada have imposed sanctions against Russia aimed at Russian banks, members of the State Duma who supported the recognition of the DPR and LPR, some businessmen, as well as personally against Vladimir Putin and Russian Foreign Minister Sergei Lavrov. In addition, the European Union has closed its airspace to Russian aircraft and banned aircraft from landing, taking off or flying over the territory of the Union. The EU has also decided to prohibit operations related to the management of reserves and assets of the Central Bank of Russia, including transactions with any legal entity, organization or body acting on behalf of or on behalf of the Central Bank. China has stated that it opposes unilateral sanctions that are not based on international law. In addition, the PRC demanded that the United States not harm the legitimate rights and interests of China and other parties in resolving the Ukrainian issue.
March 3. Brent rose to $118 per barrel for the first time in nine years The oil market continues to grow, updating all new highs. Today, Brent oil quotes have reached the level of $118.20 per barrel for the first time since February 2013. The cost of North American WTI oil rose to $114.35 per barrel. Oil is getting more expensive against the background of a shortage due to the refusal of customers to purchase Russian raw materials. Analytical companies report that almost 70% of Russian oil trade has been frozen to date. Buyers are boycotting Urals oil, despite the large discount to the market (about $19) and the fact that the sanctions did not directly affect the energy sector. Further deterioration of the situation in Ukraine will lead to the fact that an increasing number of major players in the oil market will withdraw from oil and gas projects in Russia and look for alternative sources of supply. And this will contribute to the continued growth of oil prices. To date, the American company Exxonmobil, the British-Dutch Shell, the British BP and the Norwegian Equinor have left the Russian market. To reduce high prices, members of the International Energy Agency (IEA) have agreed to sell 60 million barrels of oil from national reserves. The US Department of Energy also decided to release 30 million barrels from the country's strategic reserve. At the same time, the OPEC+ countries at yesterday's meeting decided not to accelerate the pace of increasing oil production and decided to maintain the plan to increase production quotas in April by 400 thousand barrels per day. The organization noted that the current fundamental indicators of the market and its future prospects indicate a good balance, and the current volatility is only a consequence of current geopolitical events. March 2. Buyers are boycotting Russian oil, despite a huge discount According to analysts, large oil buyers are boycotting Russian Urals oil because of the situation in Ukraine, despite the fact that Russia offers a discount to the market of up to $20 per barrel. Experts note that about 70% of Russian oil exported is difficult to find buyers. And although American and European sanctions do not restrict energy exports from Russia, ordinary buyers prefer to look for alternative sources of supply. To date, only a few refiners and traders buy Russian oil, but a sharp increase in the cost of freight and the appearance of «military» premiums for risk insurance significantly complicate transactions. Europe is mainly switching to oil from the Middle East. Until now, European countries were the largest export market for Russian oil (the region accounted for about 53% of supplies). Another 39% of exports go to Asia. At the same time, it has already become known that Asian countries are also gradually abandoning Russian oil. In particular, the Times of India newspaper reported that the country's largest oil refining company ****** Oil Corp. it will no longer purchase Russian oil, as well as oil from Kazakhstan on FOB terms (the costs of cargo delivery to the port of shipment are taken into account), since these conditions do not take into account the increase in the cost of freight and risk insurance. The pressure on the energy sector is also exerted by gas, the cost of which has soared by 57% in Europe today – to $ 2,227 per thousand cubic meters. German Economy Minister Robert Habeck said that the worst-case scenario of sanctions against Russia has not yet materialized, as the country continues to export gas. At the same time, he added that it is necessary to prepare for the worst-case scenario. It is worth noting that Russia provides about 40% of gas supplies to Europe.
March 9. Bitcoin jumped by 8% after the statement of the US Treasury Bitcoin and other cryptocurrencies jumped sharply in price after details of the executive order of President Joe Biden appeared on the website of the US Treasury Department. The order calls for an integrated approach to digital assets, and notes that government agencies will coordinate their work in this area. It is noteworthy that this statement was removed from the Ministry's websites a few hours after it was made public. However, this was enough to increase optimism in the cryptocurrency market. According to CoinDesk, the current price of bitcoin is $42,361.30. Other cryptocurrencies, including ether, also rose sharply. The cost of the ether is $2747.32. Analysts note that while some countries, for example, China, seek to destroy the cryptocurrency trade, others, in particular, El Salvador, accept it as a legal means of payment. In the USA, there is no structure of a sufficiently high level for the development and regulation of cryptocurrencies. «The leaked Treasury statement has been welcomed by the crypto market as it seems to focus on development of the industry, rather than on imposing unrealistic regulations,» said Yuya Hasegawa, market analyst at the Japanese cryptocurrency exchange Bitbank.
March 11. Gold is getting cheaper as international tensions decrease At the end of the week, gold shows a decline of more than 1% amid the weakening of geopolitical international tensions. The current price of the April precious metal futures on the New York Comex exchange is $1981 per ounce. May silver futures fell to $26,117 per ounce. The world stock and commodity markets today react mainly to the statement of Russian President Vladimir Putin that there are certain positive developments in negotiations with Ukraine. He stated this at today's meeting with his Belarusian counterpart Alexander Lukashenko. Traditionally, gold is used by investors as a safe haven asset, and on such positive news, many market participants began to switch to riskier instruments. Analysts note that the advantage of gold at the current level of foreign policy risks is rapidly decreasing. At the same time, experts suggest that the sanctions imposed against Russia in the near future may further affect supplies, which will push commodity assets to growth. March 10. Inflation in the US has updated the maximum in 40 years According to the US Department of Labor, annual inflation in the country accelerated to 7.9% in annual terms by the end of February and reached its highest since 1982. Last month, inflation increased by 7.5%. On a monthly basis, consumer prices rose by 0.8%. The annual figure is still at the records of forty years ago, now it is the highest since January 1982. The value of January was a record since February 1982. The indicators in annual and monthly terms coincided with analysts' forecasts. It is worth noting that core inflation in the United States (excluding food and energy prices) for the year was 6.4%, and for February – 0.5%. Food prices in the United States rose by 1% in February, energy prices rose by 6.7%. Over the year, food has risen in price by 7.9%, and energy – by 37.9%.
March 14. Oil started to decline at the beginning of a new trading week On Monday, the price of oil continued the decline, which began last week: the current Brent quote is $107.34 per barrel. Although more recently the price rose to the level of $ 130 per barrel. WTI quotes dropped to $102.82 per barrel (the recent high is $125.80). In total, at the end of the week, Brent fell by 5%, WTI – by 6%. Oil market participants continue to closely monitor the situation around Ukraine. The President of the country, Vladimir Zelensky, said that negotiations between representatives of the delegations of Russia and Ukraine continue every day in a video format. Zelensky noted that the main task of the delegations is to organize a future meeting of the presidents of the conflicting countries. Another factor influencing the dynamics of oil prices is the unclear prospect of the return of Iranian oil to the world market. Last week, Russia demanded from the United States legally formalized guarantees that Western sanctions would not hinder full-fledged trade, economic and investment cooperation between Moscow and Tehran in the event of the restoration of the agreement on the Iranian nuclear program (JCPOA). In response, the United States stated that it did not consider it possible to negotiate exceptions to sanctions against the Russian Federation concerning its trade with Iran in order to preserve the JCPOA. March 15. China's digital yuan may challenge the dollar China is currently making great strides in implementing its central bank's national digital currency. Experts note that in 5-10 years, the Chinese digital yuan may well challenge the dominance of the dollar as the preferred currency in international trade settlements. According to many analysts, the desire of world countries for alternative payment systems is mainly due to their desire to reduce the current (almost 100%) dependence on the US dollar. It is quite possible that in the future this dependence on the dollar will decrease to 80-85%. In the United States, they are also thinking about introducing a digital dollar, but the United States will need about 5 more years just to plan and test a potential digital currency. At the same time, China has been preparing for the use of the digital yuan since 2014. It is obvious that at the moment the Celestial Empire occupies a leading place among all countries of the world and has outstripped all available financial technologies by a decade. However, experts doubt that Beijing will use its «newborn» currency to save Russia under sanctions, despite some support from China in the Ukrainian conflict. Ultimately, China intends to achieve widespread recognition of the digital yuan, and turning it into a means against sanctions in the current conditions will not help in achieving this goal.
