OIL: Oil's Stable Period Could Last Longer, Commerzbank Says: Dow Jones

• Deutsche Bank see a large hit to Canadian aggregate demand in the event of 25% tariffs, pulling Canada into a recession that will be reinforced by the limited ability for a fiscal response as a result of political paralysis.
• Monetary policy would be the “only other stimulative option” in this situation with DB seeing a terminal policy rate falling to a least 1.5% vs the 2.75% currently priced. That would widen the Fed-BoC policy gap to at least 250bp.
• In this scenario, they see USDCAD moving to “at least 1.53, with a very real possibility that it tests the 2002 all-time highs of 1.61. By extension, USD/CAD is one of the most under-priced FX crosses for an FX trade war.”

Kaja Kallas, the European Commission Vice President and EU High Representative for Foreign Affairs, told Reuters she sees “no reason to weaken sanctions on Russia now,” noting she believes the EU will “find agreement to renew” sanctions.

• Kallas endorsed recent comments from US President Donald Trump calling on NATO members to hike defence contributions, but pushed back on his claims that the US is bearing the brunt of Ukraine financing: “We are [Ukraine's] biggest international donor.”
• Kallas noted that the EU must work “to ensure it’s at the table” for eventual Ukraine peace talks. Trump’s advisors have recently dialled back expectations that negotiations could take place within the first 100 days of Trump’s second term.
• Trump’s Treasury Sec nominee Scott Bessent appeared to confirm last week that the Trump administration is weighing the possibility of ratcheting up sanctions on Russia to force Moscow to the negotiating table. Some reporting has also suggested that Trump could unwind sanctions on Russia’s energy sector if a deal appears close. 
• Kallas said in a speech earlier today: "Russia poses an existential threat to our security today, tomorrow and for as long as we underinvest in our defence.”
• Kallas added: "Time is not on Russia's side. But it's not necessarily on ours either. Because we are not yet doing enough. There should be no doubt in any of our minds that we must spend more to prevent war. But we also need to prepare for war.”

• As expected the SPX has gapped higher on the open and worth seeing how prices are developing at these high levels, the all time record high stands at 6099.97.
• SPX trades at 6079.00, after printing a 6085.03 on the Open.