Together with the sanctions, the specter of bankruptcy looms over Russia

Monday morning brings a new economic reality. The sanctions introduced over the weekend could paralyze Russia's banking system and lead to a deep recession in the country with the risk of bankruptcy.

The West finally dared to act in full force, and the first reaction is already visible in Russian ruble prices. Although there are problems with its quotes due to the lack of liquidity, it is said that this morning it lost almost half of its value in relation to what it was still worth on Friday afternoon.

Interest rate: 20 percent What will Russia's retaliation be?

Russia's central bank reacted by doubling the interest rate, which is already 20 percent. And this seems only the beginning of further economic and social events that may soon occur in Russia as a consequence of its aggression against Ukraine.

The markets now have to weigh what steps Russia will take in retaliation for the sanctions imposed. Currently, however, there is no question of cutting off Europe from gas, oil or grains, of which Russia is the main producer in the world. Such actions could raise inflation in Europe and lead to stagflation as a result. However, Russia has to sell gas and oil, because only in this way can it currently receive the foreign currencies from which it has been cut off.

In the West… with changes, but slight 

Western markets, given the scale of the events, are not reacting very strongly. Petroleum today in the morning it increased by about 5 percent, and the WTI price rose to over USD 95 per barrel. Gold is around $ 1900 an ounce. Contracts for indices in the US are falling, but the sell-off does not reach even 2 percent. The Nasdaq 100 is at 14000 points and the S & P500 is at 4300 points. In Europe, the main index of the French stock exchange CAC40 seems to be the most losing, dropping by almost 3% to 6558 points. German DAX seems to drop 2,2% to 14233 points.

Hence, it seems that currently the markets in the west are not panicking and trading is proceeding in moderately calm moods. These may also be improved by the valuation on the interest rate market. Here, investors significantly lowered their expectations for interest rate hikes in the US. The probability for an interest rate increase of 50 basis points fell to 4%, it is due to futures contracts.