EUROPEAN MIDDAY BRIEFING - Recession Fears, U.S. -2-

Treasury Secretary Janet Yellen on Wednesday became the latest leader to warn of turbulence for the global economy. "Certainly the economic outlook globally is challenging and uncertain," Ms. Yellen said in Bonn, Germany, ahead of a meeting of leaders of seven wealthy nations. "Higher food and energy prices are having stagflationary effects, namely, depressing output and spending and raising inflation all around the world."

European Union Sets Out Plan to End Russian Energy Imports

The European Union released a $317 billion plan aimed at ending its dependence on Russian energy within five years, testing the bloc's political will to overhaul its energy policy and infrastructure in response to the invasion of Ukraine.

The plan envisions European countries cooperating in the near term to negotiate gas supply deals from producers in the U.S., the Middle East and Africa to replace energy from Russia. Meantime, the bloc would launch a massive expansion of renewable energy construction by boosting funding for projects and streamlining regulations that slow them down.

EU Proposes Up to $9.5 Billion in Short-Term Funding for Ukraine

The European Union's executive body has proposed for the first time offering up to EUR9 billion, equivalent to $9.5 billion, to help Ukraine pay its bills through the rest of 2022, matching U.S. plans to provide immediate short-term aid.

The money, which will need to be signed off by EU member states and the European Parliament, comes on top of a EUR1.2 billion loan this spring, as Europe and its Western allies seek to help President Volodymyr Zelensky's government pay debts and keep providing basic services for Ukrainians amid the Russian invasion.

Russia Weighs Fate of Ukrainian Defenders in Mariupol

Hundreds more Ukrainian soldiers were evacuated from Mariupol's Azovstal steel plant after laying down their arms and were taken as prisoners to Russian-held areas of Ukraine, Moscow said Wednesday, as Russian prosecutors called for the regiment that was holed up there to be declared a terrorist organization.

With peace talks on hold, Ukraine is staging a counteroffensive against Russian forces in the main battlefront in the east, and pinning its hopes on the continued supply of weapons from the West.

GLOBAL NEWS

Fed's Patrick Harker Supports Half-Point Rate Rises in June and July

Federal Reserve Bank of Philadelphia leader Patrick Harker said he supports the central bank doing more big rate increases at its coming meetings as it seeks to lower inflation.

"If there are no significant changes in the data in the coming weeks, I expect two additional 50-basis-point rate hikes in June and July," Mr. Harker said Wednesday in a speech text. "After that, I anticipate a sequence of increases in the funds rate at a measured pace until we are confident that inflation is moving toward the [Federal Open Market] Committee's inflation target."

More Crypto Market Turmoil Is Predicted by SEC Chairman Gary Gensler

WASHINGTON-Securities and Exchange Commission Chairman Gary Gensler said Wednesday he worries that more investors will be harmed in cryptocurrency markets, after this month's implosion of the stablecoin known as TerraUSD.

"I think a lot of these tokens will fail," Mr. Gensler told reporters after a House Appropriations Committee panel hearing Wednesday. "I fear that in crypto...there's going to be a lot of people hurt, and that will undermine some of the confidence in markets and trust in markets writ large."

Treasury Likely to Prevent U.S. Investors From Receiving Russian Debt Payments

BONN, Germany-Treasury Secretary Janet Yellen said the U.S. would likely prevent U.S. investors from receiving payments on Russian debt, a decision that could push Russia toward default.

Currently, the U.S. has carved out an exemption, set to expire on May 25, in its sanctions campaign against Russia to allow for sovereign debt payments. Without it in place, banks and investors won't be able to process and receive bond payments made by the Kremlin, likely prompting Russia's first default on its foreign debts since 1918.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

05-19-22 0537ET