Global briefing: Geopolitics & China’s recovery/ The end of Prigozhin/ 10-year rates/ BRICS+/ Small economies & slowing trade

In this week’s global briefing:

1. Geopolitics & China’s recovery: Trade and investment restriction are imposing costs on China’s economy. China may try to have these relaxed through diplomacy; but it is more likely to use its supply chain leverage to try to achieve this.

2. The end of Prigozhin: The death of Prigozhin does not necessarily strengthen Mr Putin.  Division across Russian elites, combined with increasingly evident economic challenges in Russia, continues to raise the likelihood of tail risk events.   

3. 10-year rates: US 10-year government bonds are the highest since 2007, on strong growth and persistent inflationary pressures.  But the costs of returning inflation to target may lead to a more relaxed policy approach by the Fed, causing rates to fall.

4. BRICS+: The expansion of BRICS, adding 6 countries, will not lead to a more coherent organisation.  But it reflects the hedging behaviour of significant countries in the global south.  Global leadership is increasingly contested.

5. Small economies & slowing trade: Strong small economy performance through the pandemic was partly due to strong world trade growth.  But there is now economic slowing across multiple small economies as world trade growth normalises. 

The full note is available at: https://davidskilling.substack.com/p/global-briefing-geopolitics-and-chinas