The paramilitary Wagner Group’s armed rebellion against the Russian government was short-lived but shocking. It has of course raised questions from a geopolitical perspective. We at Allspring know that uncertainty and global unrest also are part of the equation investors globally are trying to solve right now. Below, four of our investment leaders provide their insights on the situation’s potential impacts on various asset classes as well as possible risks we’re monitoring for.


Ann Miletti, Head of Active Equity & Chief Diversity Officer  

Russia’s current instability is likely to create more volatility in equity markets across the globe. This is the first real internal threat against Putin since the Ukraine war began. The bigger challenge is that the challenger—the Wagner Group’s leader, Yevgeny Prigozhin—is known to be reckless and unstable.

While the near-term signal for equity investors may read negative, there’s a chance that the challenge against Putin could weaken Russia’s position against Ukraine and the negative signal could switch to positive just as quickly.

This type of unpredictable global crisis highlights the importance of active management and bottom-up stock selection. History has proven that it’s typically costly to sell on the news. Rather, investors have been more successful staying invested in equities throughout many different cycles. What’s important is the type of companies you own.

Allspring’s equity teams have consistently highlighted the importance of staying invested in quality companies—those with strong balance sheets, production of free cash flow, strong competitive advantages, and experienced management teams—during times of uncertainty, like this one. The events that unfolded over the past weekend underscore why this focus is so important during this part of the cycle.

Fixed Income

George Bory, Chief Investment Strategist, Fixed Income

It seems the situation in Russia is diffused for now but remains “fluid.” It has created some meaningful cracks in Putin’s armor, though. It reveals how vulnerable he is and that he’s not fully in control. On the plus side, this situation gives a meaningful advantage to Ukraine, along with the U.S. and all countries supporting Ukraine. However, in an effort to reestablish control, Putin may ratchet up his use of force— which could be nasty for everyone.

As for fixed income markets, even a diffusion of the situation likely results in a flight to quality, with U.S. Treasuries and duration as immediate beneficiaries. Once the situation becomes clearer, effects such as inflation and/or risk opportunities could start to unfold. The U.S. dollar may benefit as well. If markets sell off due to risk concerns, this may present a nice opportunity to add back some risk, but it’s too soon to determine that possibility.


Matthias Scheiber, PH.D., CFA; Head of Systematic Multi-Asset, Systematic Edge

It seems that the internal Russian situation has calmed down. While calmness over the short term has led to the Russian ruble recovering its losses from last week, the longer-term implications on Putin’s power and the war in Ukraine are unclear. Should the situation flare up again, commodity markets seem to be the most sensitive asset class globally exposed beyond Russian assets, which most investors have limited their exposure to by now.

Russia is a large energy and agricultural exporter, and any turmoil might hinder Russian exports. A spike in commodity prices may affect the usual behavior of traditional risk-off assets, like U.S. Treasuries, depending on how long the situation is perceived to last. Inflation expectations might rise, which would be negative for bonds although risk-off flows could offset some of any downside.

The U.S. dollar is likely to be the most effective safe haven as it would benefit from higher rate expectations (driven by higher inflation) and risk-off sentiment. For equities, sectors like energy and materials could likely benefit. From a factors perspective, investors may seek defensive lower beta and quality.

Investment Analytics

John Hockers, CFA, PRM; Co-Head of Investment Analytics

Allspring’s Investment Analytics team is watching events closely in both Russia and Ukraine in case conflict in the region spills over to NATO or European Union countries. The situation is fluid inside Russia/Ukraine and has significant geopolitical implications that are outlined in our monthly “Allview: Market Risk Monitor.” We will continue to monitor real time and provide updates as the situation evolves.


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