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As the Russian-Ukrainian conflict rages, hectic diplomacy is underway. US and European leaders will meet, as will the NATO alliance, as all sides woo China for support.

The kind of blow economic confidence is taking can be shown by the Purchasing Managers Indices (PMIs) for March, as central banks continue to take different paths – Norway is set to tighten again while further easing could come from China.

Here’s to your week ahead in the markets of Tom Westbrook in Singapore, Lewis Krauskopf in New York, and Sujata Rao and Dhara Ranasinghe in London.

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As Russian planes pound Ukrainian cities, there has been no breakthrough in peace talks between the two sides. But the eventful diplomacy, on several fronts, continues.

Russia is seeking support from China, India and others, including to sell commodities in ways that circumvent Western sanctions.

Ukrainian President Volodymyr Zelenskiy is lobbying foreign parliaments and NATO for a no-fly zone over his country. NATO remains wary of direct conflict with nuclear-armed Russia. It meets on Wednesday in what its leader Jens Stoltenberg calls “a defining moment for our security”.

President Joe Biden will join the meeting, as well as a midweek EU summit in Brussels, aimed at cementing newfound cohesion with European allies.

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But the West risks breaking with China and India, which have failed to condemn Russian actions. India buys more Russian oil and studies a rupee-ruble payment mechanism. A call between Biden and China’s Xi Jinping is unlikely to hamper China’s efforts to fill the space vacated in Russia by Western companies. . Click here for the interactive version of the chart


It’s PMI flash week. The forward-looking indicator of economic activity for March will be something of a litmus test of the impact of the war in Ukraine.

In general, PMIs have held above the 50 mark that separates contraction from expansion. But after the ZEW index showed a record drop in German investor sentiment in March, a recession in Europe’s biggest economy cannot be ruled out.

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The ZEW barely registered with the markets, more focused on central banks’ efforts to curb inflation.

But as soaring energy costs squeeze real income and consumption, a seriously bearish batch of PMIs could set off recession alarm bells.


Two years ago, on March 23, 2020, the S&P 500 index came out of a COVID-related plunge. Since then, it has rebounded by around 90%, thanks to massive government stimulus and unprecedented support from the Federal Reserve.

Today, markets face a new set of worries. Chief among them is whether the Fed, which raised rates on Wednesday for the first time since 2018, will be able to tackle soaring inflation without plunging the economy into recession.

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Ten-year Treasury yields have risen nearly 70 basis points this year, while 2-year yields have jumped 120 basis points. If the gap between the two segments, currently around 20 basis points, turns negative, it could mean that an economic recession is approaching.

After the Fed presented a steeper-than-expected rate hike path, markets will be watching for data ahead – in addition to PMIs, consumer sentiment, new home sales and durable goods are expected. They can indicate whether the S&P 500 can recover from an 8% year-to-date loss.


Norway was the first developed country to exit the blocs with post-pandemic policy tightening, after raising interest rates in September and December. On March 24, it will rise again, bringing rates to 0.75%.

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With inflation above the 2% target and forecasts for GDP expansion of 3.6% in 2022, banks are expecting four rate hikes this year. The next meeting will be the first chaired by the new governor Ida Wolden Bache.

Don’t expect hawkishness from the Swiss National Bank, which meets on the same day. It is expected to stand still and be in no rush to raise its rate to -0.75%, the lowest in the world.

Although inflation of 2.2% in February was the highest since 2008, a tighter policy could accentuate the appreciation of the Swiss franc, an important factor for the heavily export-oriented economy. The SNB recently made a rare verbal intervention and also stepped up its currency purchases.


Reassurances from China’s State Council that policy easing is truly on the way and that authorities will be softer on markets gave Chinese stocks their biggest bounce in more than a decade.

The challenge now is to provide meaningful support without scaring investors about the state of the economy. An opportunity presents itself on Monday when the prime rates for benchmark loans are set.

Policy easing could also be achieved by cutting banks’ reserve requirement ratios or lowering medium-term rates in April after unexpectedly leaving them on hold this month.

Either way, investors will have to see something soon.

(Compiled by Sujata Rao; Editing by Frank Jack Daniel)



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