This relates to the earlier report here. It looks like geopolitical tensions are back on the menu when it comes to North Korea but it shouldn’t be of much significance unless things escalate dramatically.

1. The Dots: … The median projections only began to anticipate rate hikes years down the road starting in December 2020 and have since been progressively brought forward and raised… Markets will pay keen attention to how much higher they go and how much sooner. The common expectation is that the FOMC will tread carefully and maybe add a couple more hikes to this year, but the risk could very well slant toward both higher and earlier than previously anticipated.

2. Projections: … For some time now there have been more and more FOMC members getting increasingly worried about upside risk to  inflation  … and they are likely to further translate such concerns into a material upgrade of inflation forecasts at this meeting. Projections regarding how high and for how long on inflation plus how long and how durably they foresee lower unemployment will help to inform the committee’s stance.

3. Press conference: Chair Powell has freer rein to guide the direction of risks on important matters such as pace and level of rate hikes over time, as well as revealing further colour on the committee’s discussions around roll-off caps that would inform expectations for how quickly they may shrink the SOMA portfolio of Treasury and MBS holdings. To date he has said that the nature of the pandemic versus the aftermath of the Global Financial Crisis merits shrinking the balance sheet more rapidly. Watch for reference to how rapidly

Western sanctions on Russia have made countries that aren’t on good terms with the US acutely aware of how money can be weaponized and that appears to have rekindled Saudi-China talks on pricing oil in yuan.

The talks over pricing oil in yuan have been ongoing for six years but the WSJ reports that they’ve accelerated as Saudis “have grown increasingly unhappy with decades-old U.S. security commitments to defend the kingdom.” The report says the Saudis want US support for their intervention in the Yemen civil war.

The advisor says that either there will be an agreement in talks between both parties or that Russia will go on the offensive.

The headline may be a bit misleading but it doesn’t look like much has changed since last week. If anything, talks appear to be buying time but if they do not yield anything, it is hard to imagine Russia backing off or conceding ground in any way.