By Michael Every of Rabobank
Train of Thought
Although US 10-year yields are already playing dangerously close to the psychological 2% level, nobody is going to get excited about any economic data until Thursday’s US CPI report. As such, attention can still be focused on the Ukraine crisis. In particular, a steady train of diplomacy against a backdrop of Russian naval vessels entering the Bosporus en route to the Black Sea, and Russian trucks right next to the Ukraine border.
French President Macron returned from his six-hour meeting with President Putin around the world’s largest table (“Pass the salt, please.” …2 minutes later…”Thanks. Pass the pepper, please.”) with a promise that sounded a lot like “Je suis revenu d'Russie avec la paix pour notre époque”.
Details remain unclear, but Macron did not tell reporters “Finlandization” of Ukraine was an option on the vast table, as the New York Times reported. However, he did refer to the fact that Finland made/makes its own choice not to join NATO (to avoid Russian wrath). Macron plugged the Minsk accords, which mean Russian-occupied Donbas gaining autonomy within Ukraine. Yet critics say this could mean the region being able to veto Kyiv actions, which is worse than Finlandization, i.e., not having your own foreign or defence policy. The @kyivindependent suggests President Zelenskiy did not buy what was being sold around a much smaller table when he met Macron afterwards.
Meanwhile, the EU may be struggling to stay united despite a façade of unity: German Chancellor Scholz, President Macron, and President Duda of Poland all stood together in Berlin, but Scholz...