Every Friday, Brian Jacobsen provides perspective on key events and topics of the current week and his thoughts about what the week ahead may hold. Here’s his report for the week of February 19–25, 2022.

The week that was

  • The S&P 500 had its first “official” correction since March 2020. It’s arbitrary, and nobody really governs the use of the term, but a correction is often viewed as a 10% drop in the S&P 500 based on its closing prices. The previous peak was January 3. For much of January, stocks struggled with the Federal Reserve’s (Fed’s) hawkish pivot, but February was mostly about the Russia‒Ukraine situation.
  • It was another rollercoaster week with the news flow on Russia and Ukraine. First there was to be a meeting between President Biden and President Putin, but then Putin recognized the independence and sovereignty of parts of Ukraine. Then Putin launched military strikes against Ukraine.
    • Germany halted certification of the Nord Stream 2 pipeline, a potentially important pipeline to get Russian gas to Germany.
    • Sanctions were imposed against individuals tied to Putin and a few Russian banks. Additionally, the U.K., the U.S., and the European Union won’t allow trading of new debt issued by the Russian government (existing debt was exempted). The U.K. and the European Union approved a plan to freeze overseas assets of President Putin and Foreign Minister Lavrov.
    • President Xi of China said he favored negotiations over further actions. President Putin said he will send a delegation to Ukraine for discussions.


  • New Zealand’s central bank increased its target interest rate from 0.75% to 1.00%.
  • Purchasing manager surveys for the U.K. and the eurozone showed a significant rebound in business activity in February. Those areas began easing COVID-19 restrictions, and service sector activity increased substantially.
  • U.S. spending and inflation data for January were better than expected. Personal income was flat, and spending rose 2.1% month over month. Inflation-adjusted spending rose 1.5% for the month. The Personal Consumption Expenditures Price Index rose 0.6% month over month in January. The year-over-year increase was 6.1%.
  • Fed Governor Christopher Waller gave a detailed explanation of how he wants the Fed to hike rates and shrink its balance sheet. He said that if the data supports it, he’s not opposed to a hike of 50 basis points (bps; 100 bps equal 1.00%) in March. He mainly wants to front-load rate hikes to rebuild the Fed’s credibility as an inflation fighter. That would mean hiking at consecutive meetings to get the federal funds rate to 1.00% and then perhaps slowing down the pace of hikes. Waller would like to shrink the Fed’s balance sheet starting in July by letting securities naturally mature. To shift the Fed’s holdings to only Treasuries, he said it might be important at some point in the distant future to sell the mortgage-backed securities the Fed holds, but that’s a future concern and not a present consideration.


  • It was reported that President Biden has selected Judge Ketanji Brown Jackson of the D.C. Circuit Court as his nominee to the Supreme Court. This will be historic as the Harvard graduate, a former law clerk to retiring Justice Stephen Breyer, will be the first Black woman to serve on the Supreme Court.

The week to come

  • It’s a busy week next week. We have purchasing manager survey results for February, President Biden’s State of the Union address on Tuesday, Fed Chair Powell’s testimony before Congress on Wednesday and Thursday, and February’s employment situation report on Friday.

For more information from Allspring on the Russia‒Ukraine situation, see: “Russia-Ukraine: What’s Happening and What to Do?”

Learn more about our views on inflation here: “What’s the Outlook for Inflation?”

Thanks for reading, stay informed!

CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.


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