If you were wondering just how pot committed the Kremlin is to Vladimir Putin’s imperialist fever dream in Ukraine, the answer is… well, suffice to say Moscow is all-in.

Or at least according to UK Defense Secretary Ben Wallace, who on Wednesday told the BBC that 97% of the Russian army is estimated to be in Ukraine.

Whether that’s strictly accurate doesn’t really matter. Even if Wallace (who denied reports he threatened to resign over a defense spending row) is off by 20pp, that’d still leave three-quarters of Putin’s military committed to an effort which, a year in, has yielded very little in the way of concrete results, unless you measure “success” in casualties, in which case the campaign is going swimmingly.

Officials in Kyiv are bracing for a fresh offensive along the front lines, where Russian forces have been unable to advance — they’re stuck in the mud, figuratively and literally.

“If 97% of the Russian army is now committed to Ukraine with a very, very high attrition rate, their combat effectiveness potentially depleted by 40%, and nearly two- thirds of their tanks destroyed or broken, that has a direct impact on the security of Europe,” Wallace remarked.

NATO defense ministers are in Brussels debating what else can be done to bolster Ukraine’s defenses. Finland and Sweden were invited. Wallace indicated the UK won’t, in fact, be sending fighter jets, or at least not soon. For now, everyone’s still talking tanks.

For investors, the calculus is characteristically cold. It’s not about human suffering in Ukraine, it’s about portfolios suffering from monetary policy tightening to curb an inflation impulse that was exacerbated by the war. It’s also about the psychological overhang of the conflict on market sentiment. And (crucially) it’s about the disconcerting prospect of higher long-term real rates to account for a new macro regime born not just of the pandemic, but of shifting geostrategic tides.

The word “Ukraine” came up nearly a dozen times in the latest installment of BofA’s Global Fund Manager survey. The share identifying geopolitical concerns as the top tail risk rose from January to 17%. Note that whether “inflation stays high,” the top tail risk, will depend in part on the evolution of geopolitics.

“China/Taiwan” is a major concern for investors. There’s every reason to believe Beijing sees Ukraine as a testing ground for assessing the West’s capacity and willingness to deploy financial and military assistance in the interest of deterring land grabs based on autocratic historiography.

Although fund managers by and large don’t know much about any of this, it’s worth noting that stewards of $850 billion in capital collectively cut their subjective odds of a peace agreement in Ukraine sharply this month.

You could argue that when a group of people predisposed to viewing the world through a “because markets” lens turn pessimistic about the odds of a market-friendly outcome, that’s when things are looking really grim.

The share of respondents to BofA’s poll who expect a truce this year dropped below 20% from around 35% in January, results released this week showed.

“Doubts continue to grow that a peace agreement in 2023 could end the military conflict [and] ‘geopolitics worsen’ is now the second-biggest tail risk for investors,” the bank’s Michael Hartnett remarked.

Unfortunately, world wars are difficult to hedge. Nuclear conflicts even more so.