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Livesquawk - US Briefing - Thursday 23.09
US Briefing - Thursday 23.09
Headlines
  • BoE’s Holds Rates In 9-0 Vote, QE Held 7-2: Saunders, Ramsden Dissent
  • Markets Bring Forward Their 15bps BoE Rate Increase Bets To March 2022
  • Lira Drops, CBRT Surprises By Cutting 1 Wk Repo Rate 100bps To 18.00%
  • WSJ: China Asks Local Gvts To Prepare For Potential Failing Of Evergrande
  • China Has Told Evergrande To Avoid Near-Term Bond Dollar Bond Default
  • Punchbowl: US OMB Will Send Out Its US Gvt Shutdown Guidance Today
  • Biden Pushes Democrats To Find Consensus On USD3.5T Budget Package
  • RTRS: ECB Policymakers See The Risk Of Inflation Exceeding Projections
  • EZ, French German Sep Prelim Mfg, Services Composite PMIs Miss Views
  • S&P Global: Lifts Eurozone 2021 Growth Forecasts To 5.1% From 4.4%
  • SNB Maintains Its Ultra-Loose Stance With No Sign Of Any Inflation Surge
  • Norges Bank Hikes Rates By 25bps; Sees Another Rate Hike In December
  • French Sep. Manufacturing Confidence Misses; Business Confidence Beats
  • Spain Q2 GDP Growth Revised Down To 1.1% Q/Q From 2.8%; Y/Y: 17.5%
  • Large Miss For UK Sep. Prelim Manufacturing, Services & Composite PMIs
  • BoE's Woods: My Base Case Is That Evergrande Will Not Go Badly Wrong
  • PBoC Injects The Most Net S/T Liquidity In 8 Months Amid Evergrande Woes
  • China’s Evergrande Chairman Seeks To Reassure Investors, Shares Surge
  • Evergrande Domestic Debt Deal Calms Any Immediate Contagion Concern
  • China's MOFCOM: Terminates Anti-Dumping & Subsidy Probe Of US PVC
  • S.Africa's Central Bank Is Set To Keep Its Rates At Record Low On Sept. 23
  • Citigroup Is Not Ruling Out Natural Gas Prices At USD100 In A Frigid Winter
  • Roya Mail Sees A Higher H2 Profit; Reckitt Maintains Its Full Year Guidance
Commentary
BoE: Holds Interest Rates And Downgrades Growth Targets

The Bank of England on Thursday kept monetary policy unchanged and downgraded economic growth projections for the third quarter of the year. It comes shortly after the U.K.’s economic growth slowed unexpectedly in July and consumer price inflation saw its largest month-on-month increase since records began in Jan. 1997. The inflation reading prompted some BOE watchers to bring forward rate hike expectations off the record 0.1% low to early next year, while economists at Bank of America believe the central bank could be pressured into a rate rise as soon as February if inflation pressure persists.

 

Sterling traded up 0.4% at $1.3676 shortly after the central bank’s rate decision, paring losses from earlier in the week. The U.K. economy expanded by just 0.1% in July from a month earlier, according to data from the Office of National Statistics. It was the sixth consecutive month of growth amid the removal of Covid-19 restrictions, but the increase was significantly lower than expected and much slower than the previous month, which saw a 1% rise. The ONS said the U.K. economy remains 2.1% below its pre-Covid pandemic level.

(CNBC – Continue Reading)

Read Full Monetary Policy Report Here

SNB Reiterates Rates, Guidance

Source: SNB (Swiss National Bank)

The Swiss National Bank said Thursday that it would hold interest rates at current levels as central bankers in other countries move to tighten monetary policy at a time when Covid-19 continues to abate in some regions. The SNB said it would keep its main policy and sight deposit interest rates at -0.75%, currently the lowest in the world. It repeated that it is “willing to intervene in the foreign exchange market as necessary”, noting that it sees the franc as “highly-valued”.

 

The continued holding pattern in the Alps clashes with recent steps by a number of banks toward tighter monetary policy. The latest in line was the US Federal Reserve, whose president said Wednesday that the bar for tapering could be met “as soon as the next meeting”. This spurred talk among analysts about US rate hikes. Interest rates are expected to stay at a global low in Switzerland for a long time, economists say, and the rest of Europe is to blame. With the Old World’s recovery lagging behind America’s, the European Central Bank’s tightening is likely to come after Fed’s, with the SNB expected to hold off on rate hikes until the first ones in the Eurozone.

(LiveSquawk - Continue Reading)

Read Full Monetary Policy Release Here

German Election Too Close To Call

FRANKFURT – As if the past 18 months haven’t been eventful enough, balloting in Germany’s federal election ends Sunday, and right now it looks like a statistical dead heat for the two lead parties with a quarter of the electorate reportedly still undecided. Many of the more than 60 mln Germans eligible to vote will trek to polling centres Sunday to select a replacement for outgoing Chancellor Angela Merkel, and the country could set a record for mail-in ballots, according to local media. First projections usually come at 16:00 GMT, the deadline for voting across the nation, but forming the next administration in Berlin is expected to be a lengthy task. UBS said, “It will likely take weeks, possibly months, before coalition talks are complete and the new government takes office.”

 

The centre-left Social Democrats (SPD) are in the lead with 25% of voter support, the party’s peak for this election cycle, according to a Forsa poll released Tuesday. But their partner in Germany’s current and oft-fractious grand coalition, the centre-right alliance of Merkel’s Christian Democrats and Bavaria’s Christian Socialists known as the “Union”, has been clawing back ground. Despite having the worst-polling chancellor candidate from a major party, the Union scored 22% in the Forsa survey, a rise of one percentage point in a fortnight.

(LiveSquawk – Continue Reading)

German September Business Confidence Likely To Continue Slide

FRANKFURT – German managers are expected to voice less optimism about Europe’s largest economy for the third month running, with their view of the outlook likely to worsen. The headline German business climate index from the Ifo Institute’s monthly poll is forecast to decline to 98.9 from 99.4 in August, according to economists. The forward-looking expectations component of the index is set to drop to 96.5 from 97.5 last month, but the current conditions component is predicted to edge higher to 101.8 versus 101.4 in August.

 

Purchasing managers have already voiced their concerns this month, with both preliminary readings for the services and composite PMIs for Germany showing surprising declines, according to data released Thursday. Pollster Markit said, “The survey indicated ongoing supply disruption to manufacturing production, while the service sector also lost momentum following its recent strong rebound.” On Wednesday, Ifo cut its German growth forecast for this year by 0.8 percentage points while raising it the same amount for next year. The thinktank said economic output will only grow 2.5% this year, but it is expected to surge to 5.1% next year before dropping back to 1.5% in 2023.

(LiveSquawk – Continue Reading)

Norway Delivers Rate Lift-Off With Next Hike Set For December

Source: Norges Bank 

Norway delivered the first post-crisis interest-rate increase among economies with the world’s 10 most-traded currencies, and officials signalled an accelerated cycle of hiking to come in response to a robust rebound from the pandemic. Norges Bank raised its main rate by 25 basis points from zero, as forecast by 14 out of 15 economists surveyed by Bloomberg. Officials said that their guidance was for a “slightly” higher path for the benchmark than signalled in June.  “A normalizing economy now suggests that it is appropriate to begin a gradual normalization of the policy rate,” central bank Governor Governor Oystein Olsen said in a statement on Thursday in Oslo. “Based on the Committee’s current assessment of the outlook and balance of risks, the policy rate will most likely be raised further in December.”

 

The move is a highlight in a pivotal week for global monetary policy, with at least 15 central bank decisions responding to different stages of recovery and associated pickups in inflation. On the eve of Norway’s action, Brazilian officials raised their interest rate by a whole percentage point while the Federal Reserve said it may soon start to taper bond purchases. Norway’s krone advanced by as much as 0.4% to trade at 10.0804 per euro. That’s the strongest level in three months.

(Bloomberg – Continue Reading)

Read Full Monetary Policy Release Here

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