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Kalemu_Wang
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The manager turned first to a review of global financial
market developments. Following the Russian invasion
of Ukraine and the subsequent imposition of an array of
sanctions, the ruble depreciated roughly 40 percent
against the dollar. Prices of dollar-denominated Russian
bonds plunged 80 to 90 percent, and local trading of
Russian equities was suspended after a precipitous decline in Russian stock price indexes. Global financial
conditions tightened, reflecting declines in equity prices,
increases in sovereign yields and credit spreads, and—
for the United States—an appreciation of the dollar.
Prices of commodities that Russia exports, particularly
oil and natural gas, soared over the period. While oil
prices partially retraced late in the period, options prices
suggested considerable probability that oil prices could
remain elevated or rise further in the months ahead.
Alongside the rise in commodities prices, measures of
near-term inflation compensation increased sharply
across advanced economies. In Eastern European
countries, currencies depreciated notably and equity
prices declined, but most emerging market currencies
outside of Eastern Europe depreciated only modestly or
rose. Sovereign spreads for emerging market economies
(EMEs) widened, but the moves outside of Eastern Europe were relatively modest.
The developments in Ukraine sparked some liquidity
strains across markets. Overnight interest rates were
steady throughout the period, but there were some signs
of pressures in term funding markets. High levels of reserves in the banking system and the backstop facilities