Market movers today
Today brings the German Ifo figures. After the economy had a disappointing growth finish in 2018, we will keep an eye out for signs of a rebound in activity following the latest encouraging signs from Chinese leadings indicators and the German car sector .
In the US, many FOMC members are speaking about the target level for the Fed’s balance sheet at a conference in New York. However, after Fed minutes on Wednesday revealed that almost all Fed board members want to end the balance sheet reduction by the end of the year, the market impact of today’s speeches will probably be more limited.
In the Scandies, the Riksbank is due to publish minutes from the 12 February meeting today at 09:30 CET. The monetary policy decision was taken with only five Board members as Deputy Governor Per Jansson was absent for personal reasons. In connection with the release, Jansson will make a written comment about the decision.
Selected market news
Asian equity markets traded modesty lower after a weak session in the US on weedy economic data and miscellaneous sentiment from the ongoing US-China trade negotiations. US Treasury yields trimmed Thursday’s advance.
The US economic data demonstrated weakness across several indicators, with only initial jobless claims keeping a spark of positivism. The ISM-adjusted Philly Fed release at 52.4 was the poorest reading since October 2016, while the Philly Fed headline index went negative for the first time since May 2016. The decline in the new orders sub-index of more than 23pt was the biggest one-month decline since October 2008. New orders fell to their weakest level since May 2016.
As the 1 March and a US-imposed deadline to reach a trade agreement approaches, the US and China ‘s trade negotiators continued high-level talks in Washington yesterday to hash out a deal that could end their trade war . It is unclear whether the latest round of talks, which are due to conclude today, may be extended into next week, and where those future negotiations might occur, Reuters writes. If the two countries fail to reach an agreement by the 1 March, US tariffs on USD200bn of Chinese imports are set to rise 10% to 25%.
ECB minutes revealed that markets should brace themselves for a hawkish surprise. Not because the minutes were hawkish, but because the market is trading so expensive/dovish expectations. On the TLTRO, it is clear that it needs a monetary policy case and that ‘any decisions in this respect should not be taken too hastily, the technical analyses required to prepare policy options for future liquidity operations needed to proceed swiftly.’
Bloomberg reported that the EU expects Theresa May to request a three-month delay to Brexit, quoting two EU officials. EU officials say the three-month extension would happen under their most optimistic scenario. The risk remains that the UK could leave the bloc on 29 March without a deal. Alternatively, May could be forced to contemplate a longer delay if she cannot get backing for the agreement, according to one official.
