Ending the war?
While a hot inflation report on Wednesday initially made waves on Wall Street, the S&P 500 (SP500) ended the session just fine, while Treasury yields edged down after an earlier jump. Analysts are still discussing the developments (as well as reciprocal tariffs), though geopolitical headlines continue to make waves in the news cycle. First, it was President Trump’s proposal to take over Gaza, followed by discussions toward a peace plan for Russia and Ukraine.
Quote: “The warmer tone in the risk environment across the region reflects some shrug-off of the higher-than-expected U.S. inflation,” noted Jun Rong Yeap, market strategist at IG Asia Pte. “More inflation data is needed to establish a trend and markets were already positioned for a prolonged Fed hold.”
Crude oil also continues to fall ahead of the Munich Security Conference on Friday, with the price of WTI (CL1:COM) sliding from around $80/bbl when President Trump took office to hit $70 this morning. The new dynamic between Trump and Putin already resulted in the release of imprisoned American teacher Marc Fogel, who was exchanged for Russian national Alexander Vinnik. However, there are growing concerns in European capitals about who will be on the hook for any reconstruction in Ukraine, as well as the needed troops there or non-NATO peacekeeping force.
More details: Trump quoted Defense Secretary Pete Hegseth, who said that it’s “not practical” for Ukraine to have NATO membership, and while “some of the land will come back,” returning to the borders of 2014 is an “unrealistic objective.” Europe “must [additionally] provide the overwhelming share of future lethal and non-lethal aid to Ukraine” and any future U.S. funding would be issued with security guarantees. To accomplish that, Treasury Secretary Scott Bessent is visiting Kyiv this week to “be assured, in some form, that we are going to get this money back,” like deals that would give the U.S. access to Ukrainian rare earth minerals or inking agreements for resources like oil and gas.
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