TSI #3: Russia slips into historic debt default

Russia has defaulted on its foreign debt for the first time since the Bolshevik revolution more than a century ago. Moscow had failed to pay around $100 million in interest on two bonds. As expected, Russia denied the claim, saying the payments had been made, and the money was stuck because of Western sanctions on transactions.

So what does this mean for the world?

The west believes that the default showed the power of western sanctions. On the other hand, EU countries are still buying oil and gas from Russia. It is funny to see such controversy. On one side, the EU is punishing Russia with sanctions and on the other, they’re funding them by buying commodities. Not to mention that Russia simply increased exports to India and China, which should provide them with enough money. The default changes nothing regarding the ongoing war.

What does it mean for the stock market?

Currently, nothing changed. The war is continuing and the terrible things that come with it show no sign of stopping.

Inflation is a bigger problem for the stock market. However, the Russia-Ukraine war and inflation are somewhat connected.

If the war were to end, the market would experience a huge relief. Oil and gas prices would somewhat stabilize. When inflation is calculated, energy prices are a key component. Stable oil and gas prices would therefore have a direct effect on reducing inflation.

As a result, the central banks could stop tightening the economy. Businesses would prosper and the stock market with it. The extent of that, however, is very difficult to predict.

Will the war end in 2022?

To Your Financial Freedom,