Russia-Ukraine Conflict: Updated Views Post-Invasion

Last week, we outlined three possible scenarios for the Russia-Ukraine conflict and their implications for financial markets. Unfortunately, Russia’s invasion of Ukraine has made the full invasion scenario a reality. While the geopolitical and humanitarian picture is grim, the market response has been surprisingly modest so far. Our longer-term outlook depends on the length and severity of the conflict, but we expect a fairly protracted situation. Below, we share our updated thinking on some key variables.


We believe the conflict will add to the inflationary environment and impose a tax on global growth. We expect higher oil and gas prices even if energy sanctions don’t materialize. Russia cutting off energy supply to Europe is not in our base case, but it’s a strategy Russia may employ as a retaliation tactic or if events don’t work out in its favor. We also anticipate higher food prices—Ukraine is a net exporter of wheat, and disruption to wheat supply coming out of Ukraine could have a significant impact on wheat prices.