Market flash note on Russia-Ukraine

There was an escalation of events over the weekend and, as always, our thoughts first and foremost are with those in the Ukraine and with family there. Key updates:

• Approx. 70% of Russian banks cut from SWIFT system but crucially carves out energy sector so payments can be made for gas/oil supplies from Russia
• Freezing of Russian central bank assets so that it cannot use its reserves
• Russian currency (ruble) is -22% today with interest rates up from 9.5% to 20%
• European gas up 18% today and 50% in a week; Brent +5% to $103
• While strategically important in specific areas, the combined size of Russia and Ukraine represents c.2% of global GDP
• Key near term risk: extension of SWIFT to include energy payments or decision by Russia to cut energy supplies to Europe in retaliation for increased sanctions.