VIX up as GeoPolitical Risk rises. Dollar jumps on the invasion, but eases today, Treasury yields down due to safe haven effects. Anticipated interest rate increases moderate.
FT-IGM February Survey of Macroeconomists
Survey taken last week, published today here. The FT-IGM Survey of Macroeconomists median forecast implies this path for GDP:
Russia Deploys the Interest Rate Defense (and probably everything else)
Russia raises the policy rate to 20%, from 9.5%, which was itself raised on 2/11.
Ruble Futures
Front month, CME as of about 5pm Central:
Sanctions on Russia, International vs. Foreign Exchange Reserves, and Capital Controls
Interesting quote from 2020 IMF Article IV, Annex III: External Sector Assessment (distributed February 2021):
Guest Contribution: “Fighting the Last Inflation War”
Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers. A shorter version appeared at Project Syndicate.
Business Cycle Indicators at End-February, January Inflation Recap
Personal income and consumption for January, and manufacturing and trade industry sales for December, were released last week. The PCE deflator for January was also released, rounding out January inflation numbers.
Risk and Uncertainty Measures
VIX, Economic Policy Uncertainty, and Geopolitical Risk:
Cutting SWIFT, Sanctioning Central Bank of Russia
In the old literature on sanctions, costs imposed on the economy had to be pretty large in order to effect change (Hufbauer notes sanctions had an average impact around 2% of GDP, which wasn’t much; sanctions on Iraq were on the order of 5%). Those announced on Russia so far would not have that magnitude of impact in the short run (maybe different in the longer run). However, cutting off Russia from SWIFT — in addition to other restrictions on financial transactions — might come closer. Sanctioning the Central Bank of Russia, apparently under consideration, might come yet closer.
Thirty One Months Ago – Transcript/Shakedown for Javelins
As declassified by the President, a transcript of the July 25, 2019 telecon between Mr. Trump and the President of Ukraine: