Bundesbank President Joachim Nagel warns that it is still too early for an interest rate cut, considering the core inflation of 3.3% in January and unclear price outlooks. Despite the record loss of €19.2 billion in 2023, Nagel emphasizes that a capital injection is not necessary, and that the Bundesbank has a solid balance sheet with a silent reserve of nearly €200 billion, primarily in gold.
New York Federal Reserve President John Williams foresees a rate cut “later this year” despite robust January data, emphasizing the need for sustained signs of inflation moving toward the 2% target. Williams also underscores the importance of a smooth process in discussions about slowing the ongoing reductions to the Fed’s balance sheet to prevent market disruptions.
The European gas price reached its lowest level since May 2021, dropping below 23 euros per megawatt-hour on the Amsterdam Gas Exchange. After tensions with Russia, uncertainties surrounding Nord Stream 2 in 2021, and a peak in August 2022 at around 340 euros per megawatt-hour, the gas price has significantly decreased due to alternative fuels, strategic replenishment of gas storages, and mild winters.
The 6M Euribor is unchanged at 3.91% compared to previous business day. The 10Y Swap decreased with 8 basis points to 2.70% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
The European Central Bank (ECB) remains patient with interest rate cuts, considering the vulnerability of the inflation process and the need to maintain continuity and caution. Despite a recent decline in inflation, the risk of premature intervention is deemed greater than postponement, according to the minutes of the latest meeting. According to analysts the ECB bases its policy on incoming data on inflation and growth and emphasizes the importance of moderate wage growth for future monetary policy, while current economic activity and inflation are considered consistent with the current policy stance.
The number of new applications for unemployment benefits in the United States has decreased to 201,000, lower than economists’ expectations. The four-week moving average has also declined, indicating a favourable trend in the labour market.
The Bureau for Economic Policy Analysis (CPB) reports an upward trend in the growth of the Dutch economy. Growth is expected to be 1.1 % in 2024 and 1.6 % in 2025, following a modest growth of 0.1 % in 2023. Purchasing power is expected to increase significantly this year due to higher wages and declining inflation but will not further increase in 2025. Inflation is expected to decrease to 2.9 % this year and 2.8 % next year.
The 6M Euribor decreased with 2 basis points to 3.91% compared to previous business day. The 10Y Swap decreased with 1 basis point to 2.78% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
At the most recent meeting of the Federal Reserve, most members maintain a cautious stance towards lowering interest rates. The released minutes indicate fears that easing monetary policy too quickly could lead to entrenched price pressures. Only a minority of Fed members are concerned about the potential consequences of a prolonged restrictive policy.
The Japanese economy experienced strong export growth with an 11.9 percent increase in January, following an increase of 9.7 percent in December, exceeding forecasts of 9.4 percent. This growth led to an unexpected trade surplus, aided by a significant increase in exports to China by 29.2 percent, driven by the automotive industry and semiconductor production equipment.
Consumer confidence in the eurozone showed a slight improvement in February with an increase of 0.6 percentage points to an index of -15.5, which, however, remains well below the long-term average.
Oil prices closed higher with a barrel of WTI rising by 0.87 dollars to 77.91 dollars. The sentiment in the oil sector remains mixed, influenced by concerns over global demand but also by tensions in the Middle East that result in supply threats.
The 6M Euribor increased with 1 basis point to 3.93% compared to previous business day. The 10Y Swap increased with 6 basis points to 2.79% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
In January, the leading indicators for the U.S. economy continued to decline, according to a report from The Conference Board on Tuesday. The Leading Economic Index dropped 0.4 percent to a level of 102.7, following a 0.3 percent decrease in December.
Due to rising inflation, weak domestic demand and a weak currency, Japan has lost its position as the world’s third-largest economy, slipping into its first recession since 2018. The economy contracted with of 3.3% in Q3 followed by a further 0.4% decline in Q4 2023 to a GDP of $4.21 trillion, thus being overtaken by Germany. Economists did not expect a recession for Q4 as reported by Bloomberg, however, reduced spending by Japanese households and businesses and anticipated export challenges, especially from slowdowns in trade partners like China, indicate potential continued economic contraction.
New car sales in Europe significantly increased in January, with the European Automobile Manufacturers’ Association (ACEA) reporting on Tuesday a 12.1 percent rise to 851,690 units in the EU. Notably, Germany and France, key volume markets, showed increased sales by 19.1 percent and 9.2 percent respectively, while electric vehicle sales in the EU jumped by 28.9 percent.
The 6M Euribor increased with 2 basis points to 3.92% compared to previous business day. The 10Y Swap decreased with 4 basis points to 2.73% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
The Dutch government raised €2.44 billion through two reopened treasury bond auctions, announced the agency of the Ministry of Finance on Monday. The short-term bonds have maturities until April 29, 2024, and July 30, 2024, with yields of 3.816 and 3.74 percent, respectively. The two-month bond issuance attracted bids totaling over €6 billion, while the five-month bond saw bids totaling €2.55 billion. Subscriptions reached €2.16 billion for the first bond and €1.82 billion for the second.
EU governments are planning to approve a regulatory update for managers of alternative investments, including direct lenders. The update introduces leverage caps for private credit funds and other restrictions, which the industry warns could be burdensome. These new rules represent a significant effort by authorities to regulate an asset class that has expanded rapidly since the financial crisis, particularly in leveraged buyouts where private credit increasingly substitutes bank lending. The aim is to mitigate risks outside of traditional banking institutions pre-emptively, without stifling a burgeoning market that provides alternative funding sources.
The 6M Euribor decreased with 3 basis points to 3.90% compared to previous business day. The 10Y Swap increased with 2 basis points to 2.77% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
In January, U.S. producer prices rose more than expected, according to the U.S. Department of Labor. On a monthly basis, there was an increase of 0.3%, surpassing economists’ predictions of a 0.1% rise. Core inflation, excluding volatile sectors like trade, food, and energy, rose by 0.6%. Year-on-year, producer prices increased by 0.9%, with core prices rising by 2.6%. The inflation data suggests that the Fed is unlikely to cut rates in the short term, pushing up yields.
In February, preliminary data from the University of Michigan indicated a boost in consumer confidence in the U.S. The overall confidence index improved from 79.0 to 79.6. While respondents were slightly more negative about the current economic situation, that subindex decreased from 81.9 to 81.5. However, the expectations index increased from 77.1 to 78.4. The inflation expectation for the next 12 months rose to 3.0%, within the range of 2.3 to 3.0% seen before the pandemic. The 5-year inflation expectation remained within the range of 2.9 to 3.1%.
The AEX closed higher at 858.11 points, a 1.2% increase, despite disappointing U.S. inflation figures. Strong economic data from various sectors contributed to the rise. The UK officially entered a recession, contracting by 0.3% in Q4 2023 due to decreased consumer spending, while France experienced a slight inflation uptick, with consumer prices rising by 3.1% in January.
The 6M Euribor increased with 3 basis points to 3.93% compared to previous business day. The 10Y Swap increased with 3 basis points to 2.75% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
The confidence of American homebuilders further improved in February, with the NAHB housing index rising from 44 to 48. The increased confidence is mainly caused by anticipated decreases in mortgage rates and future interest rate cuts by the Federal Reserve.
Despite a slight retreat from its previous peak, the US dollar remains robust, with the euro/dollar at 1.0735. The rise of the dollar is supported by expectations that the ECB will impose higher interest rate cuts than the Federal Reserve.
On Wall Street, US markets closed higher, with the S&P 500 and Dow Jones rising by 0.5 and 0.7 % respectively. Investors quickly rebounded from disappointing inflation figures published earlier this week, despite some weak macroeconomic indicators such as a 0.8 % decline in retail sales and a 0.1 % decrease in industrial production in January.
The 6M Euribor increased with 2 basis points to 3.90% compared to previous business day. The 10Y Swap increased with 2 basis points to 2.72% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
The Dutch economy showed a recovery in the fourth quarter of 2023, with growth of 0.3 percent compared to the third quarter, according to data reported by CBS (Statistics Netherlands). Nevertheless, GDP contracted by 0.5 percent on an annual basis. Consumer spending, supported by government consumption and investments, primarily contributed to the economic upturn after three quarters of contraction. In December, Dutch households increased their spending by 0.3 percent year-on-year, with more money spent on services and less on goods. The figures have been adjusted for inflation and shopping days.
The economy in the eurozone remained stable in the fourth quarter compared to the third quarter, as indicated by Eurostat data. The economy showed neither growth nor contraction from the previous quarter but did rise by 0.1 percent on an annual basis. The stagnation aligns with economists’ expectations.
U.S. oil stocks showed a significant increase, while inventories of gasoline, heating oil, and diesel decreased, according to figures from the U.S. Energy Information Administration (EIA). The capacity utilization of refineries in the U.S. decreased to 80.6 percent.
The 6M Euribor decreased with 3 basis points to 3.88% compared to previous business day. The 10Y Swap decreased with 6 basis points to 2.70% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
In January, the number of Dutch companies going bankrupt decreased compared to December, but the strong upward trend persists, according to CBS. The number of bankruptcies increased by more than 60% compared to last year. The trade sector had the most bankruptcies, driven by those in the hospitality industry.
Investors have become more optimistic about Germany’s prospects as the ZEW Indicator of Economic Sentiment for Germany rose to 19.9 points in February 2024, up from 15.2 in January. However, the assessment of the current economic situation fell to -81.7 points, the lowest since June 2020. Investors are optimistic about Germany’s future amid falling inflation and anticipated interest rate cuts. Despite this, analysts foresee a sluggish recovery for the German economy, emphasizing structural challenges.
Consumer prices in the US in January rose more than predicted according to the Department of Labor. Consumer prices increased by 3.1 percent annually in January, compared to 3.4 percent the previous month. Economists had expected an inflation rate of 2.9 percent. This supports the caution of the Fed regarding interest rate cuts despite ongoing public pressure.
The 6M Euribor increased with 1 basis point to 3.91% compared to previous business day. The 10Y Swap increased with 3 basis points to 2.76% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
The US ten-year yield dropped slightly to 4.15% yesterday, while the euro/dollar traded around 1.0770. Analysts anticipate a resilient performance of the dollar in the short term, caused by global growth slowdown and high yields on US bonds. However, expectations of a Federal Reserve interest rate cut in the second quarter may weaken the dollar.
European stock markets rose, fueled by remarks made by ECB official Fabio Panetta about imminent interest rate cuts. The AEX reached another record high, climbing 0.4% to 854.88 points. The Stoxx Europe 600 index and the German DAX showed similar gains, while the French CAC 40 and the British FTSE exhibited slight fluctuations.
Sharp declines in commercial real estate were recorded in Germany, with a downturn of 12.1% in the final quarter of 2023, particularly in office properties. This trend, documented in the quarterly report of the Verband deutscher Pfandbriefbanken (vdp), signals challenging times for the real estate market in the country.
The 6M Euribor increased with 1 basis point to 3.90% compared to previous business day. The 10Y Swap decreased with 3 basis points to 2.73% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
