JPM Trading Desk Hints Zelensky Close To “Capitulation”

Are we about to have a major breakthrough in the Ukraine war?

JPMorgan’s trading desk writes this morning that futures are getting a bid as commodity prices move lower after (i) Bloomberg TV reports that Germany and Hungary may prevent the EU from banning Russian oil, deepening differences in the bloc over how to further punish Moscow for its invasion of Ukraine and (ii) citing an AP update that Zelensky’s move back from his demand that all Ukrainian territory be given back to the country; specifically, Zelensky seems ready to cede claims on Crimea and Donbas to Russia, territories that Russia has controlled for several years.

Here is the AP news in question:

Ukrainian President Volodymyr Zelenskyy said late Monday he was prepared to discuss a commitment from Ukraine not to seek NATO membership in exchange for a cease-fire, the withdrawal of Russian troops and a guarantee of Ukraine’s security.

“It’s a compromise for everyone: for the West, which doesn’t know what to do with us with regard to NATO, for Ukraine, which wants security guarantees, and for Russia, which doesn’t want further NATO expansion,” Zelenskyy said late Monday in an interview with Ukrainian television channels.

He also repeated his call for direct talks with Russian President Vladimir Putin. Unless he meets with Putin, it is impossible to understand whether Russia even wants to stop the war, Zelenskyy said.

Zelenskyy said that Kyiv will be ready to discuss the status of Crimea and the eastern Donbas region held by Russian-backed separatists after a cease-fire and steps toward providing security guarantees.

As JPM adds, “if we achieve a peace deal keep an eye on the balancing act between growth and inflation.” Previous estimates of a market kneejerk reaction have indicated that stocks could spike as high as 10% if there is credible news of a ceasefire/peace.

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