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Ukraine Latest: Russia Slams Luhansk in Fierce Fight For Region

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·9 min read
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(Bloomberg) -- Wall Street giants JPMorgan Chase & Co. and Goldman Sachs Group Inc. are withdrawing from handling trades of Russian debt after the Biden administration’s surprise announcement last week that it’s banning US investors from scooping up such assets.

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Russia continued its assault on Sievierodonetsk, pushing Ukrainian troops out of the center of the country’s last major foothold in the Luhansk region. President Volodymyr Zelenskiy called the fighting “very fierce,” and the regional governor said Russian troops now control 80% of the city.

NATO chief Jens Stoltenberg said it would be “unthinkable” for the military alliance not to defend membership hopeful Sweden if that country is attacked.

(See RSAN on the Bloomberg Terminal for the Russian Sanctions Dashboard.)

Key Developments

  • Russia’s Crude Flows to Asia Take Hold Near Unprecedented Levels

  • Finnish Leader Calls Out Turkey for Dragging Out NATO Talks (1)

  • World Nuclear Powers to Reverse Post-Cold War Drop in Arsenals

  • ‘Party Like a Russian’ Turns Toxic at Putin’s Flagship Forum

  • US Quietly Urges Russia Fertilizer Deals to Unlock Grain Trade

  • JPMorgan, Goldman Halt Russia Debt Trading After US Tightens Ban

(All times CET)

Portugal PM Tells FT Europe Risks Creating ‘False Expectations’ (6:01 a.m.)

Portugal’s Prime Minister Antonio Costa said in an interview with the Financial Times that the European Union should focus on providing help quickly to Ukraine instead of holding “legal debates” over the lengthy process of whether to designate the country as a candidate for membership.

“My focus is to obtain in the next European Council a clear commitment on the urgent support and to build a long term platform to support the recovery of Ukraine,” he told the newspaper in London. “This is my main priority. The most important are not legal debates about Ukraine but practical deliveries.”

Russia Controls 80% of Sievierodonetsk (5:17 a.m.)

Russian forces control now as much as 80% of Sievierodonetsk city, according to Luhansk regional governor Serhiy Haiday.

All three bridges linked to the city in the eastern Luhansk region have been destroyed, he said, and it’s not possible to evacuate civilians or bring in humanitarian aid. “The situation is difficult,” he said.

The Ukrainian General Staff said in its morning update that Russia reinforced its units near Sievierodonetsk, moving as many as two battalion tactical groups to an area in the vicinity of nearby towns Rubizhne and Kreminna.

JPMorgan, Goldman Halt Russia Debt Trading (11:15 p.m.)

JPMorgan and Goldman Sachs were still matching sellers who wanted out of Russian debts with interested buyers this month, according to market professionals.

Now, JPMorgan is pulling back after the US Treasury’s Office of Foreign Assets Control said investors in the US aren’t allowed to acquire them, a person with knowledge of the decision said. A spokesperson for Goldman said it’s halting such transactions, too.

The Treasury Department’s announcement late June 6, stepping up financial sanctions, caught market participants off guard and set off a flurry of talks with lawyers.

Read more: JPMorgan, Goldman Halt Russia Debt Trading After US Tightens Ban

US Quietly Urges Russia Fertilizer Deals (6:27 p.m.)

The US government is quietly encouraging agricultural and shipping companies to buy and carry more Russian fertilizer, according to people familiar with the efforts, as sanctions fears have led to a sharp drop in supplies, fueling spiraling global food costs.

The effort is part of complex and difficult negotiations underway involving the United Nations to boost deliveries of fertilizer, grain and other farm products from Russia and Ukraine that have been disrupted by President Vladimir Putin’s invasion of his southern neighbor.

US and European officials have accused the Kremlin of using food as a weapon, preventing Ukraine from exporting. Russia denies that even as it has attacked key ports, blaming the shipment disruptions on sanctions imposed by the US and its allies over the invasion.

Ukraine Suspends Export of Fuel Oil, Coal Due to Invasion (5:29 p.m.)

Ukraine’s government suspended the export of fuel oil, coal and domestically extracted natural gas, according to a government resolution dated June 10 and published Monday.

Russian Crude Flows to Asia Near Unprecedented Levels (4:21 p.m.)

Russia’s seaborne crude flows are taking on a new pattern as Moscow seeks to deal with impending European sanctions on its exports. India has moved from being an insignificant buyer of Russian crude to the second-biggest destination for shipments, behind only China.

Asian buyers, dominated by China and India, are now taking close to half of all the crude shipped from the country’s ports, with a steady stream of tankers heading around Europe and through the Suez Canal from the Baltic and Arctic Seas.

NATO Chief Says Allies Would React if Sweden Is Attacked (4:04 p.m.)

Stoltenberg, secretary general of NATO, said Sweden has already received security assurances from several members of the military alliance as it seeks to join the group.

He told reporters after meeting Swedish Prime Minister Magdalena Andersson that NATO has also stepped up with more exercises and more military presence. “And that makes a difference, meaning that if Sweden was attacked, then I deem it as unthinkable that NATO allies would not react,” Stoltenberg said.

The NATO chief welcomed “clear messages, signals” from Sweden to address Turkish concerns about the country’s application. Andersson said that on arms exports, “as a member of NATO, the independent agency we have might view these decisions differently.” She added: “We take the Turkish concerns very seriously, not least their security concerns when it comes to terrorism.”

War in Ukraine Remains No. 1 Concern Globally, Poll Shows (3:15 p.m.)

Russia’s invasion of Ukraine remains people’s biggest concern in every one of the 19 countries surveyed, closely followed by economic worries and the cost-of-living crisis, according to the Kantar Global Issues Barometer, which included 11,000 respondents.

While Covid-19 is no longer seen as a pressing concern, 64% of people globally listed the war as a top worry, followed by 39% who mentioned economic issues. The level correlated with proximity, with 94% of Poles independently offering that they are anxious about the war, compared with 80% of Spanish, German and French, Kantar said.

Ukraine Sees 2022 Grain Harvest Dropping About 40% (3:05 p.m.)

The war will cut Ukraine’s grain harvest to as little as 48 million tons, from 84 million tons a year ago, as the country has lost about a quarter of its farming area, Deputy Agriculture Minister Taras Vysotskyi said.

The war prevented sowing and harvesting that could have increased the expected grain crop by at least 20 million tons, he said.

Russia Switches Tactics, Summer Heat May Ease River Crossings (2:19 p.m.)

Russia has radically reduced infantry maneuvers in Ukraine, choosing instead to use its superiority in artillery and tank firepower to gain a battlefield advantage, Ukrainian military spokesman Oleksandr Motuzyanyk said.

Hot weather is making the nearby Sieverskyi Donets river shallower, forcing Ukrainian troops to reinforce areas where Russian forces may attempt to cross, he said. Russian missiles fired from aircraft and ships struck targets in the city of Pryluky in northern Ukraine on Monday.

Scholz, Macron, Draghi to Visit Kyiv Thursday: Report (12:15 p.m.)

German Chancellor Olaf Scholz will visit Kyiv on Thursday with French President Emmanuel Macron and Italian Prime Minister Mario Draghi, Business Insider reported, without identifying the source of its information.

Wolfgang Buechner, a German government spokesman, said at a regular news conference Monday that there’s no new information about a possible Scholz trip to Ukraine. The European Commission is expected to recommend on Friday that Ukraine be granted candidate status to join the European Union, though the complicated accession process may take decades to complete and the move is seen as more of a symbolic gesture than a fast track to actual membership.

Macron Calls for Review of French Military Budget (12:12 p.m.)

On the campaign trail for legislative elections next Sunday, Macron said that he would ask for a review of French military spending on the back of the war in Ukraine. As a candidate earlier this year, he pledged to boost the defense budget.

Ukraine’s June Rate Hike May Be the Last Needed (11:40 a.m.)

The Ukrainian central bank may not need to increase borrowing costs further after it more than doubled its key interest rate to 25% earlier this month, according to minutes released Monday.

The National Bank’s monetary policy committee members voted 7-3 on June 2 to raise the key rate 15 percentage points to the highest level in Europe, while agreeing the country’s economy is not ready to return to a floating hryvnia exchange rate.

Even as uncertainty over the war may require the central bank to remain open to further policy tightening, some members said in the longer term the key rate may need to be cut rapidly if there is an influx of international financial support.

Zelenskiy Adviser Publishes Heavy Weapons Wishlist (9:51 a.m.)

Ukraine needs parity in heavy weapons to end the war, Mykhailo Podolyak, an adviser to Zelenskiy, said on Twitter.

Russia has been gaining ground in eastern Ukraine, using its better-supplied military to bombard positions in some of the war’s most intense fighting to date. Kyiv’s appeals to its western partners for weapons have become more urgent in recent days.

Hundreds Killed by Russian Shelling in Kharkiv, Amnesty Says (7:46 a.m.)

Hundreds of civilians in Kharkiv have been killed by Russian shelling and rocket attacks that constitute war crimes, Amnesty International said in a report that detailed numerous strikes.

“The people of Kharkiv have faced a relentless barrage of indiscriminate attacks in recent months,” said Donatella Rovera, Amnesty International’s Senior Crisis Response Adviser. “The Russian forces responsible for these horrific attacks must be held accountable.”

A local medical official told Amnesty 606 civilians had been killed and 1,248 injured in the Kharkiv region since the war began.

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