The standoff between Russian and Ukrainian troops in Crimea has markets on edge, forcing analysts to reevaluate their positions in light of new risks that few would have imagined a few weeks ago. While declaring up front that he’s not an expert on the region, and that he won’t claim to know what Russian president Vladimir Putin might do next in Ukraine, Royal Bank of Scotland Group plc (NYSE:RBS) (LON:RBS) head of cross asset strategy John Briggs waded into the issue on in a research note earlier today to update some of his recommendations.

Ukraine Russia War  Crimea

“I cannot but help but believe that this situation is not resolved and still has the potential to get worse before it gets better. I’ll cut to the chase and what I think Putin’s end-game is: to either formally obtain the Crimea or informally dominate it by having the Crimea vote for separation or independence,” writes Briggs.

Ukraine Crimea situation is like Syria, but with higher stakes

Briggs points to the facts that as of a 2001 census, a majority of people in Crimea are ethnically Russian, that Crimea has been part of Russia for most of the last 200 years, that it is still Russia’s only warm water port, and that Putin has said he will do anything to defend Russians in the Ukraine as evidence that he will not simply back off and leave. He compares the situation to Syria, but with even higher stakes.

Ukraine Uncertainty reinforces the argument for inflation breakevens

With that in mind, Briggs says that the current situation supports inflation breakevens, so he stands by the earlier recommendation to be long 10 year TIPS Breakevens from 2.12% to hedge inflation fears. Briggs previously recommended 3s10s UST flatteners from 205 bps, but now thinks investors should consider taking profits as the present uncertainty has pushed back this play.  He also says that collateralized mortgage obligation (CMO) floaters are still more attractive than TBA passthroughs, partially because of their shorter duration positive convexity, but he ends his blog post with a reminder that he sees the world from a financial lens, and the most important actors in Eastern Europe don’t necessarily have the same point of view.

Economically it makes little sense for the West or Russia to escalate the present situation. But with cultural and political issues dominating economic ones, my thoughts above should be read just as that … my own personal thoughts,” he writes.