Consumer confidence in the Eurozone improved slightly in February, as shown by the final figures from the European Commission on Wednesday. The index increased by 0.6 points to -15.5, remaining well below the long-term average. Consumers became more positive about their financial situation and seemed more willing to make major purchases. However, consumers became slightly more negative about the general economic situation in their country.
Additionally, Dutch industrial producers were also slightly less negative, according to figures reported by Statistics Netherlands. The confidence index rose from -4.4 in January to -4.2 in February. Manufacturers were more positive about the expected business activity. However, they were more negative about their order books.
The growth of the U.S. economy slowed down even further in the fourth quarter of 2023 than initially measured, according to a second estimate released on Wednesday. The economy grew by 3.2 percent in the fourth quarter, compared to 4.9 percent in the third quarter. An initial calculation put the growth at 3.3 percent for the last three months of 2023.
The United States’ crude oil inventories increased last week, while gasoline, heating oil, and diesel stocks declined. In the week ending February 23, crude oil inventories rose by 4.2 million barrels to 447.2 million barrels. Gasoline stocks decreased by 2.8 million barrels to a total of 244.2 million barrels. Stocks of heating oil and diesel fell by 0.5 million barrels to 121.1 million barrels.
The 6M Euribor increased with 2 basis points to 3.92% compared to previous business day. The 10Y Swap decreased with 1 basis point 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 December, U.S. housing prices increased at a faster pace compared to November, with the Case-Shiller index revealing a 6.1% year-on-year rise in the 20 largest metropolitan areas and a 7.0% jump in the 10 largest cities, despite a month-over-month decrease of 0.3% and 0.2% respectively.
The euro is trading in a narrow range around 1.0860 dollars, with investors awaiting U.S. inflation data for January that will influence the Fed’s monetary policy decisions. A rise in core inflation is expected on a monthly basis with a slight decline year-on-year, with significant attention focused on Thursday’s PCE inflation and upcoming monetary policy statements.
German consumer confidence has slightly improved for March, with the GfK research institute’s index rising to -29.0 from February’s -29.6, matching economists’ expectations. French consumer confidence unexpectedly fell in February, with the INSEE confidence index dropping to 89 from January’s 91, contrary to economists’ expectations of an increase to 92.
The 6M Euribor decreased with 1 basis point to 3.90% compared to previous business day. The 10Y Swap increased with 2 basis points to 2.80% 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.
Yesterday, the European Union Council adopted rules to enable Instant Payments in the euro currency 24/7, aiming to enhance competition for European payment firms against their U.S. counterparts. This regulation allows customers to transfer euros within 10 seconds at any time, even outside traditional business hours, not only domestically but also across EU borders.
According to Christian Schulz, Vice Chief Economist Europe at the U.S. bank Citi, the German economic model needs to adapt. Germany’s overreliance on exports is outdated, considering the evolving global landscape. Citi emphasizes the need for domestic sources to drive economic growth.
The Bank of England governor, Andrew Bailey, stated that Britain is displaying signs of recovery from its mild recession and anticipates a boost when interest rates decrease later this year. Bailey dismissed claims that the central bank’s hesitancy to reduce borrowing costs despite declining inflation indicated a lag in response and clarified that rate cuts were on the horizon.
The 6M Euribor is unchanged at 3.91% compared to previous business day. The 10Y Swap increased with 8 basis points 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.
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.
