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Economic sanctions cripple Russian economy as ruble plunges, interest rates soar

  • Economic sanctions levied by the U.S. and allies have sent everyday Russians flocking to ATMs to wait in lines dozens deep in the hopes of withdrawing cash.
  • Russians want to withdraw their rubles either to spend them on physical goods insulated from inflation or to swap them for stable currencies like the U.S. dollar or euro.
  • A prolonged drop in the value of the ruble would ultimately translate into a lower standard of living for Russians.
  • Any goods or commodities Moscow imports — from wheat and soybeans to medical supplies — will be magnitudes more expensive, as well as foreign travel.

news from CNBC

Stocks slide, oil jumps as Russia orders troops to Ukraine regions

SINGAPORE (Reuters) – Oil jumped to a seven-year high, safe-havens rallied and U.S. stock futures dived on Tuesday as Europe’s eastern flank stood on the brink of war after Russian President Vladimir Putin ordered troops into breakaway regions of eastern Ukraine.

Brent crude futures rose 1.6% to $96.94, just off their overnight seven-year high. S&P 500 futures fell 1.5% and Nasdaq futures fell 2.2%. Asian stocks were also down over half a percent, while Japan’s Nikkei skidded sharply.

The Russian rouble briefly touched an 18-month low in early Asia trade on Tuesday, after Russia’s MOEX equity index had fallen 10.5% the day before.

Spot gold, in contrast, hit a new six-month top of $1,911.56. [GOL/]

Lumber prices on the rise again

Source: National Assn. of Homebuilders
Lumber prices are climbing once again, adding thousands of dollars to the cost of a new home. Builders and consumers thought relief had arrived when the price of lumber started to fall late last year, after soaring to record highs earlier in the year. But starting in December 2021, lumber prices again started to increase. Lumber prices are about triple their average pre-pandemic levels, reports Random Lengths, a lumber industry news site. That’s adding more than $18,600 to the price of a newly built home, the National Association of Home Builders reports.

Covid

California lays out plan to live with Covid for the long-term.

  • California’s plan aims to pick up rising viral transmission early and rapidly sequence new variants to determine whether vaccines and therapeutics are still effective.
  • The state also aims to rapidly deploy additional testing and hospital staff to regions impacted by an outbreak.
  • The state could reimpose mask mandates depending on the dominant variant and how much disruption it’s causing.
  • California on Thursday laid out a plan that manages Covid as a permanent aspect of life, anticipating future surges and new variants that may require temporary public health measures such as facemasks depending on how much the virus is disrupting economic and social activity.

U.S. mortgage interest rates top 4%

(Reuters) – The interest rate on the most popular U.S. home loan surged by the most in nearly two years last week, shooting above the 4% level for the first time since 2019 as financial markets anticipate that the Federal Reserve will respond to the highest inflation in a generation with an aggressive run of rate hikes.

The Mortgage Bankers Association on Wednesday said its weekly measure of the average contract rate on a 30-year, fixed-rate mortgage climbed to 4.05% in the week ended Feb. 11 from 3.83% a week earlier. That was the highest since October 2019 and the largest weekly increase since March 2020 when the onset of the coronavirus pandemic was roiling financial markets.

Fed ready to raise rates, shrink balance sheet soon

  • Federal Reserve officials outlined plans for interest rate hikes and a reduction in the asset holdings on their balance sheet at their last meeting.
  • Minutes released Wednesday from the January session show concern about inflation and financial stability though members urged a measured approach to tightening monetary policy.
  • FOMC members noted that inflation was beginning to spread beyond pandemic-affected sectors and into the broader economy.

Inflation surges 7.5% on an annual basis

  • The consumer price index for all items rose 0.6% in January, driving up annual inflation by 7.5%.
  • That marked the biggest gain since February 1982 and was even higher than the Wall Street estimate.
  • Core inflation rose 6%, which also was a notch above expectations.
  • Real earnings for workers increased just 0.1% on the month when accounting for inflation.
  • Weekly jobless claims declined to 223,000, below the 230,000 estimate.