Macroeconomic & Geopolitical

Russian Gas Flows Face New Obstacles

May 2022 – 3 min read

European gas disruptions led the euro to depreciate against the dollar, while U.S. inflation data buoyed stagflation fears and expectations of aggressive Fed tightening. In China, renminbi weakness continues, given more hints of policy easing.

Watchlist

russian-gas-flows-chart1.jpgArrows indicate consensus forecast compared to the previous period. Local dates of release.

U.S.
  • We will watch April retail sales to gauge how consumers are responding to higher prices for necessities.
  • April and May housing data should help show to what extent the jump in the 30-year mortgage rate—which has risen to the highest level since 2009—is weighing on demand.
Europe
  • The Russian invasion of Ukraine and its spillovers remain at the top of the watch list as disruptions in energy and stiffening EU sanctions continue.
  • U.K. inflation is expected to increase further, keeping pressure on the BoE to raise rates.
  • EA consumer confidence will show the health of household spending before entering into a slowdown phase.
Asia Pacific
  • The People’s Bank of China (PBOC) will announce the medium-term lending facility rate, with a 5bp cut expected for the 1-year loan prime. Stabilizing growth is authorities’ top priority, though rising prices may complicate this.
  • Japan 1Q22 GDP is likely to contract, given the impact of virus restrictions.

22-2199523

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Kathryn Asher

Associate Director, Economist

Agnès Belaisch

Managing Director, Chief European Strategist

Matteo Cominetta

Director, Economist

Bonnie David

Assistant

Christian Floro

Associate Director

Anna Hanley-Walsh

Analyst

Christopher Smart, PhD, CFA

Chief Global Strategist & Head of the Barings Investment Institute

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