A near-term pick up in the nation’s economic fortunes, means this week’s UK budget is expected to produce far fewer swingeing cuts to spending than some investors feared just a couple of months ago. This leaves the Chancellor of the Exchequer (finance minister) with a little more fiscal wriggle room although analysts predict he will likely resist splashing the cash.

Households are currently suffering from high inflation and a weakening growth outlook and the majority do not expect the Budget to deliver much in the way of relief. A Savanta poll found that only a third (32%) say they think that it is likely that the Budget will improve the economy.

Chris Hopkins, political research director at Savanta said, “This Budget does not have the makings of a 'classic' in terms of headlines and intrigue, but it's another opportunity for [Prime Minister] Rishi Sunak and his economics lieutenant, Jeremy Hunt, to further push their sensible, pragmatic and considered approach to managing the country and its finances." (Continue Reading – LiveSquawk)

China’s economy strengthened in the first two months of the year following the end of Covid restrictions, although the recovery remains unbalanced as industrial output lagged.

Retail sales rose 3.5% from the same period last year, the National Bureau of Statistics said Wednesday, in line with forecasts and reversing from a 1.8% drop in December.

Industrial output rose at a slower-than-expected pace of 2.4%, while the jobless rate increased following the Lunar New Year holidays. Fixed-asset investment grew strongly, a sign the government is boosting infrastructure spending to spur the recovery. (Continue Reading – Bloomberg)

Japanese firms’ wage negotiations, known locally as the "shunto", are expected to result in the biggest round of salary hikes since 1997 with analysts predicting increases at or above 3%. 

While Prime Minister Kishida has insisted on a hike of 3%, 18 unions under the collective UA Zensen body, are wrangling for an average wage increase of 5.28% with employers. 

The vice chair of the Japan Research Institute noted that “Wage increases are gaining momentum across the board.” Along with inflation and labour shortages. (Continue Reading – LiveSquawk)

Bank of Japan (BOJ) policymakers debated the feasibility of making further tweaks to its bond yield control in January with one member saying it must keep "various options in mind" on the future policy path, minutes of its meeting showed on Wednesday.

The nine-member board also agreed inflation and wages could overshoot expectations, suggesting a phase-out of its massive stimulus remained on the cards when Kazuo Ueda succeeds incumbent dovish governor Haruhiko Kuroda next month.

But the board also saw the risk of companies failing to deliver big enough wage hikes to eradicate the public's deeply entrenched deflationary mindset, the minutes showed. (Continue Reading – Reuters)

The Federal Reserve is rethinking a number of its own rules related to midsize banks following the collapse of two lenders, potentially extending restrictions that currently only apply to the biggest Wall Street firms.

A raft of tougher capital and liquidity requirements are under review, as well as steps to beef up annual “stress tests” that assess banks’ ability to weather a hypothetical recession, according to a person familiar with the latest thinking among U.S. regulators.

The rules could target firms with between $100 billion to $250 billion in assets, which at present escape some of the toughest requirements. There are about two dozen banks within the range, such as Fifth Third Bancorp and Regions Financial Corp. (Continue Reading – WSJ)