Economy

LONDON (Reuters) -Battered euro zone bonds recovered ground on Thursday, but were set to end March with one of their biggest selloffs in years as rising inflation and rate-hike risks left German Bund yields on track for their biggest monthly jump since 2009.Most 10-year yields across the single currency bloc fell 6-8 basis points, a day after high German and Spanish inflation prints triggered fresh selling. Data on Thursday showed inflation in Italy hit 7% while prices in France were up 5.1%, but a more than 5% fall in oil prices brought some comfort to bond investors.Surging inflation, which has raised expectations that the European Central Bank may have to hike interest rates sooner rather than later, and a more aggressive stance from the U.S. Federal Reserve have sent bond markets reeling.Germany’s 10-year Bund yield, down eight basis points (bps) at 0.57%, is up 42 bps in March and set to end the month with the biggest monthly surge since 2009. If yields rise much further they would be on track for the biggest move since 1996. Two-year German yields, trading just under 0%, have jumped around 45 bps this month – poised for their biggest monthly rise since 2011.Dutch and French 10-year bond yields were set for their biggest monthly rises since 2012 and 2011 respectively, with monthly rises over 40 bps each.”This is very significant,” said ING senior rates strategist Antoine Bouvet. “A move of this magnitude will have investors reassess the riskiness of their bonds portfolio and have market participants who thought their rates risk was negligible until now hedge it.”Euro zone inflation is increasingly likely to stabilise around 2% but the ECB should be ready to change course if the outlook deteriorates due to Russia’s war in Ukraine, ECB chief economist Philip Lane said.”The ECB has relatively high inflation, but actually, inflation’s undershot for a long period of time and the (euro zone) economy is not overheating to the same extent (as the U.S),” said Andrew Sheets, chief cross-asset strategist at Morgan Stanley (NYSE:MS).”There’s also more flexibility at the ECB and I think the ECB would like to take rates to zero and get ahead of negative rate policy.” The ECB’s deposit rate is at -0.50%. Yield surges in euro area bond tracked similar milestones in other major debt markets. U.S. 2-year Treasury yields are up around 85 bps in March, set for their biggest monthly increase since 1989, according to Refinitiv data. They are up 155 bps this quarter, on track for the biggest quarterly jump since 1984. More

THE HAGUE (Reuters) -Ukrainian President Volodymyr Zelenskiy asked the Dutch parliament on Thursday for weapons, reconstruction aid and a halt to all business with Russia in response to the invasion of his country.”Stronger sanctions are needed so that Russia doesn’t have a chance to pursue this war further in Europe,” he told lawmakers via video link. “Stop all trade with Russia.”Zelenskiy, the first foreign head of state to address a plenary session of the 150-member Dutch lower house of representatives, said the Netherlands must “be prepared to stop the energy from Russia so that you do not pay billions for the war”.Roughly 20% of Dutch natural gas comes from Russia, which has become an increasingly important trading partner for the Netherlands in recent years.The Dutch, along with other EU countries including Germany, are looking for other energy sources, but quick alternatives are few and global supplies limited.Zelenskiy asked the Dutch to “adopt a city” in Ukraine to focus post-war reconstruction efforts. The Netherlands has supplied Ukrainian forces with military equipment, including anti-tank rockets and Patriot air defence systems and is also supporting NATO’s increased presence along the military alliance’s eastern flank. The Dutch have so far been unable to effectively freeze or seize tens of billions of euros (dollars) in Russian assets registered in the Netherlands, due to complex tax structures that make it difficult to identify ultimate owners of corporate holdings and property.A letter to parliament from the Finance Ministry on March 22 said 392 million euros ($431.24 million) in Russian assets and transactions had been frozen under EU sanctions imposed since the invasion on Feb. 24.Opposition Labour Party leader Lilianne Ploumen called on the government of Prime Minister Mark Rutte to urgently implement EU sanctions and quickly target the assets because we can “no longer justify this to Ukraine”.In a reference to the war crimes courts in the Netherlands, Zelenskiy called for justice.”Those who gave the orders (to bombard and shell Ukraine) must be called to account. In The Hague, city of tribunals, people know that,” he said. More

The payments come as the finance ministry is due to make a $447 million coupon payment on Thursday on a dollar Eurobond that matures in 2030.Investors are watching closely Moscow’s servicing of its debt after Western sanctions aimed at isolating Russia economically.The sanctions have led European clearing houses Euroclear and Clearstream to limit their business with Russian clients. This has left foreign OFZ investors cut off from their rouble bond holdings and local sovereign Eurobond holders, in turn, from interest payments in hard currency. The National Settlement Depository (NSD), a Russian national clearing house, citing a central bank’s order, said this month that foreign OFZ bond holders are barred from receiving coupon payments until further notice.NSD, which processes OFZ interest payments on behalf of the finance ministry, did not immediately reply to a Reuters request for information on which investors received the coupon payouts.OFZs are used by the government to finance some of its budget needs. Before a growing standoff between Moscow and the west made the bonds a risky asset, they were popular with foreign investors thanks to their lucrative yields and Russia’s then-strong economic fundamentals. The share of foreign investors among OFZ holders declined to 17.8% in February, the lowest since late 2012, from 19.1% a month earlier. This week, Russia has offered to repay in roubles part of a $2 billion Eurobond that matures on April 4, to secure payments for local investors who may not be able to receive dollars. Investors declining the rouble offer would be paid in U.S. dollars on April 4 when repayment is due, a source has said.($1 = 81.5000 roubles) More

TOKYO (Reuters) – Japan’s central bank on Thursday pledged to ramp up scheduled bond purchases in the second quarter, signalling it will continue to aggressively defend its yield cap against the global tide of higher interest rates.In a closely-watched bond buying schedule for April-June, the Bank of Japan (BOJ) said it will increase purchases for government bonds across the yield curve compared with the current quarter.The announcement came after the BOJ maintained its offer to buy unlimited amounts of 10-year Japanese government bonds (JGB) at a fixed rate of 0.25% for four straight days this week.”We decided to increase bond purchases for a wide range of durations, from short- to super-long zones, as the yield curve remained under upward pressure,” a BOJ official told Reuters.The 10-year JGB yield fell half a basis point to 0.210%, after rising to as high as 0.225% on Thursday.Longer-term yields retreated sharply, with those for 20-year JGBs falling 9.5 basis points to a two-year low of 0.670%. The 30-year JGB yield fell 8 basis points to 0.920%.”The central bank boosted the amount of bonds it would buy by a large margin,” said Ataru Okumura, strategist at SMBC Nikko Securities. “Its stance to defend yield curve control is clear.”Under its yield curve control (YCC) policy, the BOJ pledges to target the 10-year JGB yield around zero and sets an implicit 0.25% cap around it.”I think JGB yields will stabilise for now. The problem is what happens to U.S. Treasury yields. If U.S. yields spike, that could put upward pressure on Japanese yields again,” said Hiroshi Ugai, chief Japan economist at JPMorgan (NYSE:JPM) Securities.With the economy still weak and inflation modest compared with Western economies, the BOJ has stressed its resolve to keep monetary policy ultra-loose even as the U.S. Federal Reserve eyes a series of rate hikes.Prospects of widening U.S.-Japan rate differentials have pushed the yen down by around 8% against the dollar this month.The yen’s decline has exacerbated the rise in cost of fuel and raw material imports triggered by Russia’s invasion of Ukraine.Japan’s top currency diplomat Masato Kanda on Tuesday hardened his language on sharp yen declines, saying Tokyo and Washington were closely communicating on currency issues.But Rintaro Tamaki, a former top currency diplomat, said the yen’s weakening was driven partly by Japan’s ultra-low rates and not too far out of line with economic fundamentals.”The yen is still moving with a range it has been boxed in since 2013, so it can’t be said that (its recent declines) are a sharp deviation from fundamentals,” he told Reuters. More

This was supposed to be the year European wages started to catch up with inflation, but the economic fallout of Russia’s invasion of Ukraine leaves many EU workers facing even bigger pay cuts in real terms, according to union officials and executives.Consumers across the region have been grappling with soaring prices for electricity, fuel, food and other goods for over six months. But a strong eurozone jobs market — the unemployment rate hit a record low of 6.8 per cent in February — and reports of labour shortages for many EU companies prompted economists at the start of the year to predict strong wage growth.Now many companies, including key employers such as car manufacturers, chemical companies, food producers and steelmakers that depend on Russia and Ukraine for imports, could be plunged into crisis mode. The growing risks of energy rationing and production shutdowns are undermining the case for big pay increases, despite the booming job market and need to protect workers from higher inflation.“In the context of mounting growth headwinds — including fresh supply-side disruptions and record-high commodity prices fuelled by Russia’s war with Ukraine but also China’s zero-Covid strategy — unions are likely to scale back their wage demands as corporate margins are bound to take a notable hit,” said Katharina Utermöhl, senior economist at Allianz.Such supply bottlenecks have already hit car and truckmakers because of a shortage of wiring harnesses supplied by factories in Ukraine. This week, German truckmaker MAN said it had furloughed about 11,000 staff, sending them home on 80 per cent pay, after similar plant closures and shift cancellations at Volkswagen and BMW.The fallout from the Ukraine conflict is knocking consumer and business sentiment. A European Commission survey published on Wednesday showed that its eurozone economic sentiment indicator had fallen to its lowest level for 12 months, “mainly due to plummeting consumer confidence”. The outlook for the EU labour market also worsened as consumers’ unemployment expectations rose sharply and companies’ employment expectations fell in most sectors, except for services. The Ifo Institute said its barometer of German companies’ hiring expectations had dropped to its lowest level since May 2021.“In general, and especially under these circumstances, nominal wages won’t grow like prices,” said Enzo Weber, head of research at the Institute for Employment Research in Nuremberg. “This means that we will have real wage losses in 2022.”Unions in Germany’s chemicals industry started their collective bargaining round earlier this year demanding that wages rise at least in line with inflation, which is expected to exceed 6 per cent in Germany in 2022. However, since the invasion of Ukraine raised the prospect of Russian gas imports to Europe being cut off, union officials agreed to postpone negotiations until next month and offered to seek an interim solution. “In a scenario where there is an embargo that triggers an across-the-board labour impact, in that case every collective bargaining round is blown up,” Michael Vassiliadis, president of the union representing Germany’s 580,000 mining, chemical and industrial energy workers, said this week.Henrik Follmann, head of his family’s eponymous chemicals group and a board member at the sector’s employers association in Germany, said: “There is so much uncertainty, and everyone understands this. Yes, inflation is high and, yes, we have to compensate our workers, but not in this scenario.” Workers look set to have their purchasing power squeezed further after German and Spanish consumer prices rose at close to 40-year highs in March. Eurozone inflation is expected to set a new record of 6.6 per cent when the data are released on Friday. “Wage growth will remain muted this year,” said Carsten Brzeski, head of macro research at ING. “Unions will opt for job security instead of higher wages.”He said the arrival of 3.8mn Ukrainian refugees into EU countries could reduce labour shortages, though many are women and children and may not speak the local language or be looking for a job.Some governments, including those in Germany, France, Spain and Italy, are trying to cushion the blow by cutting fuel prices for motorists and reducing energy bills for poorer households. Several countries also plan to raise minimum wages, in Germany’s case by almost 30 per cent to €12 per hour.However, in the final three months of last year, nominal hourly wages in the eurozone rose at an annual rate of 1.5 per cent, well below the pace of inflation that was surging at 4.6 per cent over the same period, according to Eurostat.

Truck drivers in Madrid, Spain, on strike over rising fuel costs © Sergio Perez/EPA/Shutterstock

As a result, real hourly wages fell by 3 per cent, the largest drop since comparable data began 14 years ago. The drop is visible across various measures of wage pressures. Once adjusted for inflation, eurozone negotiated wages per employee, tracked by the European Central Bank, contracted by 1 per cent in the fourth quarter.The pain is being felt across the region. Real wages fell about 3 per cent in Germany and Italy in the fourth quarter, and more than 4 per cent in Spain and the Netherlands.With its cap on energy prices keeping a lid on inflation and a stronger economic rebound, France experienced a milder contraction in real wages of 1.4 per cent, yet that is still one of the biggest falls in the country over the past decade. “The sharp rise in inflation has led to a dramatic decline in real wage growth which is likely to get worse as inflation rises further,” said Anna Titareva, an economist at UBS. However, Titareva believes wages in Europe will ultimately pick up provided the Ukraine crisis does not develop into a prolonged conflict. “Against this backdrop, and assuming no material fallout on eurozone labour markets from the Russia/Ukraine war, we expect upcoming wage rounds to lead to higher settlements,” she added. More

Investing.com — U.S. President Joe Biden is set to announce a massive release from the Strategic Petroleum Reserve in a fresh effort to bring gasoline prices down in time for the midterms. OPEC meets with Russia and other allies and is expected to open the taps only a little. U.S. personal spending and income data are due, as is the February update for the Fed’s preferred measure of inflation. Walgreens reports earnings. And China’s manufacturing sector slips into contraction as COVID-19 lockdowns hurt activity. Here’s what you need to know in financial markets on Thursday, 31st March.1. Biden to announce SPR releaseU.S. President Joe Biden will announce plans to release up to 1 million barrels of oil a day for six months from the Strategic Petroleum Reserve in a new effort to drive down oil prices, according to various reports.Biden is under pressure to bring gasoline prices down far enough to have a material impact on inflation to neutralize it as an issue in the midterm elections due in November.The planned releases are much larger than the last effort to bring prices down earlier this year and come at a time when the momentum in oil prices has weakened. However, it doesn’t alter the fact that the SPR is conceived as a reserve against physical shortages of oil rather than a mechanism for pushing the market one way or the other.By 6:15 AM ET, U.S. crude futures were down another 6.2% at $101.19 a barrel, while Brent crude was down 5.3% at $105.48 a barrel.2. OPEC+ to meet as Lavrov seeks alternative buyers for oil in IndiaBiden’s initiative is timed to coincide with the latest monthly meeting of the so-called OPEC+ group, which is expected to sign off on another routine increase of 400,000 barrels a day. OPEC’s ministerial meeting starts at 8 AM ET (1200 GMT), and Russia and others will join half an hour later.While Deputy Prime Minister Alexander Novak is meeting with OPEC, Foreign Minister Sergey Lavrov is in Delhi, trying to nail down the terms of a mechanism that would allow India to pay for increased shipments of Russian oil bypassing the dollar-based financial system.Russia’s oil system still faces constraints due to a buyers’ strike in Europe. Reuters reported that many refineries have either reduced or ceased operations due to their inability to find buyers abroad, while pipeline operator Transneft has reduced the amount of oil it accepts from major producers.3. U.S. data to show pressure on consumer spendingThe U.S. will release personal income and spending data for February, which are likely to be examined for any further evidence of a slowdown in activity as pandemic-era savings are whittled down.January’s spending figures had shown a surprisingly strong 2.1% gain, but February’s are more likely to be influenced by the continuing surge in consumer prices, more data on which will be available in the price index for personal consumption expenditures in February, which is also due at 8:30 AM ET.In addition, there are the weekly jobless claims, which are expected to stay below 200,000 for a second week.Overnight, data in Europe pointed to an increasing battle with stagflation, with U.K. house prices rising at an 18-year high, German retail sales falling in February (even before Russia’s war with Ukraine) and French inflation running way ahead of expectations. The market is now pricing in some 60 basis points of tightening by the European Central Bank by the end of 2022.4. Stocks set to open mixed; Walgreens in focusU.S. stock markets are set to open mixed later, with the sharp drop in oil prices over the last two days offering some support to equities despite ongoing fears about inflation and monetary policy tightening.By 6:20 AM ET, Dow Jones futures were down 11 points – effectively flat – while S&P 500 futures were up 0.1% and Nasdaq 100 futures were up 0.3%. All three indices had finished in the red on Wednesday as hopes for a quick end to the war in Ukraine were damped by the Kremlin. President Vladimir Putin told Italian Prime Minister Mario Draghi earlier that the conditions for a ceasefire are not in place.Stocks likely to be in focus later in Walgreens (NASDAQ:WBA), which reports quarterly earnings, along with CVS (NYSE:CVS), which reached a $484 million opioid-related settlement on Wednesday. Intel (NASDAQ:INTC) may also come in for some scrutiny after awarding a bumper options package to CEO Pat Gelsinger. Proxy shareholder service ISS has already come out against the package.5. China’s factories struggle with COVID; Shanghai set to extend lockdownChina’s manufacturing sector slipped back into contraction in March, under the impact of COVID-19 lockdowns and waning demand from the U.S. and Europe as pandemic-era stimulus programs fade.The official manufacturing Purchasing Managers Index fell to 49.5 from 50.2, against a backdrop of continued problems with port and factory closures. The South China Morning Post reported overnight that Shanghai is likely to extend the lockdown of its Pudong district beyond the scheduled end date of Friday.Elsewhere, the impact of a Chinese boycott was again evident in figures released by Swedish fashion retailer H&M (ST:HMb), whose quarterly profit fell well short of expectations. In addition to problems in China, the chain has also had to close its stores in Russia, its sixth-largest market, and has accelerated its plan for net store closures this year. More

Vladimir Putin “massively misjudged” the invasion of Ukraine, according to a British spy chief who said that Russian soldiers were refusing to carry out orders, were sabotaging their own equipment and had mistakenly shot down their own aircraft.Jeremy Fleming, head of Britain’s signals intelligence agency GCHQ, said in a speech in Australia that Putin had “overestimated the abilities of his military to secure a rapid victory” and that his advisers were “afraid to tell him the truth” about a campaign that was “beset by problems”.US officials concurred with the British view and cast doubts on Russian claims of a withdrawal from Ukraine’s cities in the north and west.John Kirby, Pentagon spokesperson, said yesterday that the US believed Russia was repositioning just a “small percentage”, about 20 per cent, of its forces amassed around Kyiv.He added that while those troops were moving away from Kyiv, and some had entered neighbouring Belarus, none were heading back to their home bases — a signal Russia may not be committed to a sustained withdrawal.Ukrainian president Volodymyr Zelensky addressed the Australian parliament today and called for further military assistance and stricter sanctions on Russia. More on Ukraine:Energy markets: The Biden administration is considering releasing up to 1mn barrels of oil a day from its strategic reserves, the third and potentially largest oil release since November. Prices of Brent crude, the international benchmark, dropped nearly 4 per cent today and WTI, the US marker, was 5 per cent lower. Telecoms: Huawei, the controversial Chinese technology company, has been an early winner of the Ukraine war and is positioning itself to be an aid to the Putin regime. Finance: In the first few days of the war the wealthy clients of New York hedge fund Firebird called to enquire about their portfolios. “It’s been a very difficult and disappointing time,” co-founder Harvey Sawikin said.Ukraine diary: Journalist Tim Judah chronicles the first 21 days of the war in this picture diary of his reporting trip to Ukraine. Opinion: Ukraine’s former president Petro Poroshenko outlines what next the west can do to help his country. The war is an opportunity for Europe to reinvent itself and uphold the rule of law, writes Tony Barber. The FT View is that Moscow has a history of treating ceasefires as a military tactic, rather than steps towards peace. Podcast: Gideon Rachman talks to Catherine Belton, author of the bestselling book Putin’s People, in the latest episode of Rachman Review.Thanks for reading and here’s the rest of today’s news — GordonFive more stories in the news1. Biden to use Korean war-era powers to boost supply of EV battery minerals The Biden administration will invoke Korean war-era powers to boost domestic supply of minerals crucial for electric vehicles and large capacity batteries, as it tries to reduce its dependence on overseas energy.2. China’s manufacturing and services activity contracts The official manufacturing and non-manufacturing purchasing managers’ index contracted in March for the first time in almost two years, highlighting the economic strains of the government’s strict coronavirus measures.3. Will Smith faces possible suspension from Academy The group behind the Oscars is weighing disciplinary actions against actor Will Smith, including possible expulsion or suspension. The Academy of Motion Picture Arts and Sciences’ board of governors met yesterday to discuss how Smith should be punished.4. SoftBank to slow investments The Japanese group’s billionaire founder Masayoshi Son has warned top executives to slow down investments as the world’s largest tech investor scrambles to raise cash amid a rout in tech stocks and regulatory crackdown in China. 5. BioNTech to return almost €2bn to shareholders The German biotech, which launched the first Covid-19 vaccine in partnership with Pfizer, plans to return nearly €2bn to shareholders through share buybacks and a special dividend following the commercial success of its Covid-19 vaccine.The day aheadOpec+ meets Oil producing countries led by Saudi Arabia meet today amid calls from western leaders for the cartel to increase production. Oil prices have risen 40 per cent this year linked to concerns about supplies from Russia not reaching customers in Europe and sanctions on Russian exports.Ukraine updates Officials from Gazprom, the Russian government and central bank are set to report to Vladimir Putin with a clear mechanism to facilitate payments in roubles for the country’s gas. Sergei Lavrov, Russia’s foreign minister, arrives in India for talks. Meanwhile, Liz Truss, UK foreign secretary, is also in India to put pressure on the government of Narendra Modi to condemn Russia’s invasion of Ukraine. Monetary policy Federal Reserve Bank of New York president John Williams gives opening remarks before the hybrid “The Future of New York City: Charting an Equitable Recovery for All” event hosted by the Federal Reserve Bank of New York.Economic data The Commerce Department is scheduled to release consumer spending data for February. A report by the Labor Department is expected to show that initial claims for state unemployment benefits rose 10,000 to a seasonally adjusted 197,000 for the week ended March 26. The claims report is also expected to show that the number of people receiving benefits after an initial week of aid remain unchanged at 1.350mn for the week ended March 19.Earnings Walgreens Boots Alliance, which is in the process of selling UK chemist Boots, is expected to report higher profit and revenue, helped by an Omicron-driven increase in demand for Covid-19 vaccines. Join us on Thursday May 5 in person or online for a discussion on the power of the individual investor with Merryn Somerset Webb and the FT’s Claer Barrett. Register here.What else we’re reading and listening to

© FT illustration/Bloomberg

Meet the ‘crypto caucus’ A bipartisan mix of libertarians, business champions and technology utopians is uniting in Washington to help the sector grow. This eclectic group of US lawmakers could become one of the most powerful groups on Capitol Hill to shape the rules for the fast-growing industry.Why does Netflix cancel so many shows? There has been outrage over Netflix abruptly ending popular series, seemingly with no explanation. The most recent victim was The Babysitters Club, a TV series based on some 1990s books about pre-teen girls navigating their adolescence in suburban Connecticut. US media correspondent Anna Nicolaou explains.Emmanuel Macron struggles to rediscover winning spirit Five years ago, Macron stormed his way to the French presidency after a frenetic campaign. Now, as he seeks a second term, his team worries that he is spending too much time on the war in Ukraine and has become a distant establishment figure to voters.The mobile apps that are helping to bring financial literacy skills to overlooked groups A new generation of fintech start-ups like Your Juno, Wealth8 and Bloom Money are providing education on all things money for traditionally overlooked groups, such as young women and minority groups.Health and wellnessTired, unfocused brain in need of a boost? The traditional recourse — coffee — is, it turns out, very pre-pandemic. Enter the latest nootropics — cognitive enhancers that will take users up and up. More

The liberal-democratic market economies, which Russian president Vladimir Putin has prompted us to think of as “the west” again, suffered a deep crisis of confidence in the decade and a half after the 2008 financial crash. Putin’s invasion of Ukraine on February 24 all but swept away any western timidity, self-doubt and division that could have been expected. Putin certainly expected it, as Timothy Snyder explains very well in a conversation with the Washington Post’s Greg Sargent.While the west’s response needs to be much more forceful still — a full embargo on Russian energy exports is imperative, as is more ambitious military support for Ukraine — there is no denying the west has surprised even itself by its resolve.Two recent speeches suggest how the war brings out the west’s unappreciated strengths. At Chatham House in London, Wally Adeyemo, US deputy Treasury secretary, said: “Russia’s brutal and unprovoked attack on Ukraine is — at its most fundamental level — a rejection of the principles that undergird the postwar system we collectively built”, a system based on “rules, norms, and values that underpin the international economy and the decades of growth and poverty reduction”.It is not just that we want to protect this system of common rules. Adeyemo’s key insight is that it is because we have built a system of common rules that we are equipped to inflict severe damage on Russia’s economy. He said: “Our ability to so swiftly curtail the Kremlin’s ability to fund its priorities and degrade its ability to project power is a direct result of our cooperation and collective investment in the international economic system.”The other speech was by Jeremy Fleming, UK intelligence chief, who asserted that Putin’s advisers are not telling him the truth, a point also made by US intelligence officials. US secretary of state Antony Blinken commented that: “One of the Achilles heels of autocracies is that you don’t have people in those systems who speak truth to power or who have the ability to speak truth to power.” These speeches highlight something that I think we have too often forgotten. Many features of liberal democracy may seem to put us at a disadvantage in direct conflicts with autocracies such as Putin’s: our openness makes us easy to read, democratic decision-making sacrifices decisiveness and the rule of law limits the room for action. In fact, however, these seeming weaknesses are sources of tremendous strength. What the speeches I referred to illustrate is how it is precisely liberal democracy’s self-imposed requirements — its binding systems of rules, its openness, its need to accommodate the vast majority of its members — that make it resilient. We can see at least three examples of this in the war in Ukraine, both through Russia’s deficiencies and the west’s successes. First, Adeyemo’s point about economic power: it is because of the tremendous economic value of a rules-based order that exclusion from it is such a powerful weapon. Second, open societies have an informational advantage. They may be unable to keep much secret — but for that very reason they are less likely to deceive themselves. When the truth is freely expressed, there is no way a democratic leader who actually wants to be informed can be kept in the dark by his or her coterie. Nor will ordinary people be as betrayed as the Russian conscripts Putin had denied were ever sent to Ukraine.And third, the sense that everyone plays by the same rules — the plain meaning of a “rules-based order” or the “rule of law” — engenders trust, collaboration and popular support. A largely truthful public sphere is a key reason why western countries have overcome differences in interests around sanctions, for example, and that their publics are quite clear about who to blame for high energy prices. These normally discreet charms of liberal democracy are on bright display in Ukraine itself. The country’s fitful but determined move towards becoming a western society has stood it in good stead in the war. It buttresses President Volodymyr Zelensky’s legitimacy and leadership, and it helps the extraordinary unity of communication shown by Ukrainian representatives at all levels. Well-placed Ukrainian contacts have told me that earlier decentralisation reforms, which boosted local accountability and room for manoeuvre as relevant knowledge on the ground, now contribute to military effectiveness.It is worth reading the full transcripts of recent interviews Zelensky has given (one to The Economist and one to independent Russian journalists). They show that the Ukrainian president is fully aware that the fight is not just over territory or even freedom, but over what sort of society Ukraine is going to be. Fighting — militarily — for the west and for liberal democracy is of a piece with Ukrainians’ pre-existing efforts to establish a less corrupt, more rules-based economy and integrate with the EU. In Snyder’s words, there is such a thing as being a “resolute pluralist”, and Zelensky is one.There are two important forward-looking lessons to draw.One is about the value of liberal democracy. The old Francis Fukuyama thesis that nothing will ultimately prove more attractive to people than liberal democracy, then, is still alive and kicking. Matthew Yglesias has a good discussion on how those two big competing 1990s ideas — Fukuyama’s “end of history” and Samuel Huntington’s “clash of civilisations” — hold up today’s geopolitics. Yglesias suggests that the real faultline of conflict turns out to be “good government versus bad government”, where Zelensky is precisely “trying to give people . . . the basic ingredients of the end of history: good government, autonomy, and prosperity through integration with the richer parts of the world”. That is good as far as it goes, though there is still an ideological competition. Not, as Yglesias suggests, against political Islam, but against the temptation to think that liberal democracies are bound to underperform systems with strong and unconstrained leaders, managed information, and nativist and socially conservative propaganda — in a word, fascism. That is not a new fight so it does not invalidate Fukuyama’s end of history argument — though it shows how anti-democratic forces will keep trying to delay history’s end.The other lesson is about Ukraine itself. Molly McKew asks us to lift our eyes to the horizon and try to imagine what a Ukrainian victory could mean: “Ukraine is trying to buy us all a different future. Trying to force us to see there can be one — if Putin is defeated here, and if we all accomplish this together. If they can get us to have sufficient imagination in time . . . It is not Russia but Putinism that must be defeated. The Ukrainian gamble has given us the possibility to be able to bring this about . . . Ukraine’s survival, if it is a victory for us all, will sustain this newly revitalized Europe and carry it forward [to a] future where Europe doesn’t end in a hard eastern border, where Russians don’t feel isolated and misjudged by their European cousins. Where Ukraine is not the bloodlands of the conquest of empires, but the brilliant new engine of a better future for us all.”Nothing less than this is at stake. The Ukrainians are putting their lives on the line for such a future. The west, and the EU in particular, has everything to gain from joining their struggle. Other readablesIn my FT column this week, I argued that the EU’s move towards common natural gas purchases could make the bloc’s energy policy a tool of global influence. Meanwhile, Germany and Austria are making preparations for possible rationing should Russia cut off gas supplies.The IMF is becoming ever more comfortable with capital controls. And Gita Gopinath, the fund’s deputy managing director, thinks sanctions on Russia could weaken the dollar’s supremacy in the global financial system.The demographic make-up of the economics profession reflects the general population less well than most other fields of inquiry, a new study finds.Don’t miss the great newsletter collaboration between my colleagues on FT Unhedged and Adam Tooze’s Chartbook.Numbers newsThe latest data are published today on the Personal Consumption Expenditures Price index, the inflation measure targeted by the Federal Reserve. More