Daily summary: Partial oil embargo realizes expected risk

European Union members have reached an agreement on an embargo on Russian oil. The embargo will only cover imports by sea, while imports via oil pipelines will still be possible. By the end of the year, 90% of oil imported into the EU from Russia will be covered by the embargo. However, it is worth noting that despite the desire to limit Russian oil imports, some countries have recently imported record amounts, and Russia's current account has increased several times. Russia is making billions of dollars, even with a $30 cut for third countries. Even at around $80-90 per barrel, Russia's margin on sales is huge. Moreover, more and more oil is coming to Europe from Russia through "side" channels. Therefore, there is a chance that the embargo will only be on paper and will only lead to greater inflationary pressure in Europe.

The oil embargo will be a part of the next sanctions package, which will also include the disconnection of the largest Russian bank (Sberbank) from the SWIFT system.

China's PMI index for the industrial sector rose in May from 47.4 to 49.6 (49.1 expected) and the index for the service sector increased from 41.9 to 47.8 (45.2 expected)

Despite good sentiment following the improvement in China, indexes in most places around the world lost today. Indexes in Europe lost more than 1%, while on Wall Street declines range from several hundredths for the Nasdaq to 1% on the Russell 2000. The market is waiting for news from the Biden-Powell meeting.

The US CB consumer confidence index for May fell to 106.4 from 108.6 in the previous month, but this was still above expectations at 103.6. Earlier, the Chicago PMI reading also came in above expectations at 60.3 with an expectation of 55 and the previous reading of 56.4 points.

CPI inflation in Europe rose from 7.4 to 8.1% year-on-year while the market was expecting an acceleration to 7.7% year-on-year. This further strengthens the case that the ECB may start raising interest rates mid-year.