Goldman Sachs: Markets Pricing 70% Probability of Ukrainian Peace Deal

In a recent note to clients, Goldman Sachs analysts stated that financial markets are increasingly pricing in the likelihood of a peace deal in Ukraine, with the current implied probability reaching approximately 70%. This marks a significant shift from the sub-50% estimates observed prior to the U.S. presidential election in November 2024, suggesting growing investor confidence in a potential resolution to the long-standing conflict.

The surge in optimism has been largely attributed to the return of Donald Trump to the presidency. Trump has repeatedly emphasized his intention to bring an end to what he terms a "proxy war" between the United States and Russia, promising swift action toward brokering a ceasefire. His administration is reportedly exploring diplomatic channels and leveraging backdoor communications with both Moscow and Kyiv.

Meanwhile, Russian President Vladimir Putin has indicated conditional support for a ceasefire proposal put forward by the United States. Though the exact terms remain undisclosed, Kremlin insiders suggest they involve territorial concessions and international guarantees of neutrality for Ukraine. However, Ukrainian President Volodymyr Zelensky has dismissed these conditions as "unacceptable" and "disconnected from the realities on the ground," underscoring Kyiv's firm stance on restoring full territorial sovereignty, including over Crimea and the eastern Donbas region.

Markets have responded to these developments with cautious optimism. Bond yields in Eastern Europe have declined, and the Ukrainian hryvnia has shown relative strength in recent weeks. Equities with exposure to the region—particularly in energy, agriculture, and infrastructure—have also seen a boost, reflecting investor hopes for a post-war reconstruction phase.

Goldman Sachs noted that while the 70% figure reflects market sentiment, significant risks remain. "Any sustainable peace agreement would require complex negotiations, security guarantees, and likely international oversight," the report stated. "Nevertheless, the directional shift in geopolitical expectations is clear."

The firm also warned of potential volatility should talks falter or if either side takes escalatory actions on the battlefield. Additionally, the role of European allies—who have been more cautious in embracing Trump's diplomatic approach—could be pivotal in shaping the outcome of any proposed peace framework.

As of now, both the State Department and the Russian Foreign Ministry have refrained from offering detailed comments, and official peace talks have yet to be formally scheduled. However, back-channel diplomacy and third-party mediation—possibly involving Turkey or China—are believed to be underway.

For now, markets are watching closely, and the coming months could prove pivotal in shaping the future of Ukraine and broader European security.

Author: Global Ripple

Posted on: April 09, 2025