This week, US House Speaker Mike Johnson changed his mind, and potentially the tide of history. 

Following months of delays, the House of Representatives finally approved an aid package to Ukraine worth $61bn, which was immediately approved by both the Senate and Joe Biden. Johnson, who had until now blocked a vote on the aid package, made a dramatic about-face, defying some in his own party in order to get the bill passed.

The package will provide much needed assistance to Ukraine in its waning effort against Russia. But several uncertainties lie ahead: it remains to be seen how willing Donald Trump would be to extend these efforts in a second presidency. In turn, this would weaken the security of Europe and embolden others, notably China, to undertake their own territorial conquests, with potentially disastrous consequences for businesses globally. On the US side of things, it makes Johnson’s position as Speaker even more precarious, and could result in even more uncertainty for MNCs both in the US and abroad.

In the short-term, though, the aid package means Ukraine lives to fight another day.

Senior Analyst, Global Economics

This weekend saw a symbolic and ominous “first”: the first direct confrontation between Iran and Israel. Following a strike on Iran’s embassy in Syria, the Iranian regime responded by sending around 300 drones toward Israel, marking what many feared would be the start of a considerable escalation. 

In fact, Iran’s retaliation was swiftly thwarted. Most of the drones were shot down and there were no reported casualties. Investors remained calm: when trading opened on Monday morning, oil prices barely budged.

Still, it remains to be seen if the matter is closed, or if the respective attacks were the opening salvo of further escalation between the two countries. Our newly published  Middle East conflict scenarios  help bring light to this complex and volatile situation.

Senior Analyst, Global Economics

The solar eclipse isn’t the only thing that cast a shadow on the United States this week.

A higher-than-expected inflation figure, the third in a row, is pointing to a worrying trend: the downward trajectory of inflation is stalling. The implications are clear: the Federal Reserve is likely to postpone any potential rate cuts until after the summer, and when implemented, they may be more conservative in scale.

This will have global effects: to protect their currencies, central banks around the world are unlikely to lower rates much more than the Fed. In turn, this could derail much-needed recoveries in markets and industries sensitive to interest rates, and continue to place undue pressure on labor markets and overall economic activity.

Much like the eclipse, let’s hope this temporary rebound in US inflation is fleeting.

Senior Analyst, Global Economics

High oil prices are back on the menu. 

In the last two months, the price of the Brent crude oil benchmark has increased by 17%, buoyed by an increase in geopolitical risk in the Middle East and Ukraine, as well as strengthening macroeconomic fundamentals in some of the world’s major economies.

So far, there is no indication that this could delay rate cuts: central bankers are more concerned with other inflationary factors, such as services. But further increases in oil prices for a sustained period of time could undo some of the disinflationary trends in categories such as durable goods and transportation and, in doing so, stall the progress toward central banks’ inflation targets. We’re not out of the woods just yet.

Senior Analyst, Global Economics