The key US stock market indices - Dow Jones, NASDAQ, and S&P 500 - closed Wednesday with a fall. The first drop in the last 7 days. Thus, at the moment, everything looks as if the correction has been completed and now the indices are ready for a new round of decline. Earlier this week, James Bullard and Jerome Powell from the Fed significantly strengthened their "hawkish" attitude. The first one said that the 0.25% rate hike in March was a mistake and he supported a 0.50% increase. The second said that during 2022, the regulator will raise the rate not only by 0.25% each time, but also, if necessary, by 0.5%. In general, everything is going to the fact that the tightening will be strong and fast. By the end of the year, the rate may rise to 2.5%, and this is already a neutral level. After overcoming it, each subsequent increase will put more pressure on inflation. While all increases up to 2.5% will have only a restrained effect on price growth. One way or another, the US dollar gets a fundamental background that can support it throughout the year. And stock indices and risk instruments get a powerful pressure factor on themselves.
There is not much news on Ukraine right now. As we have already said in previous articles, the entire military conflict is slowly turning into the form of "Donbas 2.0". There has been no advance of Russian troops for 2 weeks, the Ukrainian military is not going on a counteroffensive. As a result, according to military experts, both sides will take positions and shoot back, and the whole conflict may persist for many months or even years. At the same time, Russian President Vladimir Putin made a "knight's move" and said that now payment for gas, oil or raw materials delivered to Europe or other countries unfriendly to Russia will be made in Russian rubles. The President of the Russian Federation said that since the countries of the West and the EU decided to freeze or arrest the gold and foreign exchange reserves of the Central Bank of the Russian Federation, Russia simply does not consider it profitable for itself to continue making settlements in euros or dollars. Against the background of this news, the ruble sharply strengthened against the dollar. It also became known that Russia is expelling all American diplomats from its territory. Most likely, a retaliatory measure from Washington will soon follow. From our point of view, such steps further inflame relations between Russia and the West, but we must admit that these steps are logical and expected. Neither the United States, nor the European Union, nor Russia concedes in secret negotiations, do not want to listen and hear the opposite side. Therefore, the escalation of the conflict is the only thing that can be observed in the world right now.