Inflation in the Netherlands amounted to 16.8 percent in October, according to the European harmonized consumer price index (HICP). This was revealed on Monday from a publication by Statistics Netherlands (CBS). In September inflation was still at 17.1 percent and in August at 13.7 percent.
Dutch retail sales increased their turnover in September, but also now with declining volumes. This was shown on Monday from figures from Statistics Netherlands (CBS). In September, sales rose 5.3 percent from the same period a year earlier, while sales volumes declined by 3.5 percent.
The Chinese economy saw growth turn into contraction in October. This was revealed on Monday with figures from the Chinese government. The purchasing managers’ index for the services sector stood at 48.7 in October, compared to 50.6 in September. The Chinese manufacturing purchasing managers’ index was found to have fallen from 50.1 in September to 49.2 in October.
The 6M Euribor increased with 2 basis points to 2.12% compared to previous business day. The 10Y Swap increased with 13 basis points to 2.98% 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 raised interest rates by 75 basis points on Thursday, as expected. The 75 basis point increase raises the main refinancing operations and interest rates for the marginal lending facility and the deposit facility to 2.00, 2.25 and 1.50%, respectively, starting from 2 November 2022.The ECB already signaled that more interest rate hikes are coming.” Inflation is still far too high and will remain above target for an extended period,” the ECB said.
Denmark’s central bank raised its key interest rate by 0.60 percentage points to 1.25% on Thursday to its highest level in thirteen years, following a rate hike earlier in the day by the European Central Bank. Denmark, the first country in the world to impose negative rates in 2012, last month broke with a decade-long experiment of negative interest rates as it lifted its key rate into positive territory. Denmark’s main interest rate is now at its highest level since August 2009.
The US economy grew by 2.6% on a quarterly basis in the third quarter, as reported in the US government’s first estimate on Thursday afternoon, versus an expected growth of 2.3%.
The 6M Euribor decreased with 1 basis point to 2.10% compared to previous business day. The 10Y Swap decreased with 13 basis points to 2.85% 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 Bank of Canada announced a smaller-than-expected interest rate hike on Wednesday and said it was getting closer to the point where rate hikes could end, as it forecast the economy could possibly slip into a slight recession. The central bank increased its policy rate by half a percentage point to 3.75%, coming up short on calls for another 75 basis points move. It has lifted rates by 350 basis points since March, one of its fastest tightening cycles ever.
Emerging market investors who avoided Chinese shares this year have seen less pain than those with portfolios exposed to the gamut of EM stocks, a trend exacerbated by this week’s selloff. The iShares Emerging Markets excluding China ETF has fallen by 25% so far this year, its worst performance since its inception in 2017.
British government bond yields rose on Wednesday as finance minister Jeremy Hunt pushed back his upcoming fiscal statement into November, a complication for investors and the Bank of England as they try to determine the inflation outlook. The fiscal update had been due on Monday but in a televised announcement, Hunt pushed it back to Nov. 17 – meaning the BoE will not be able to incorporate it into its economic forecasts, due to be published on Nov. 3 alongside its interest rate decision.
The 6M Euribor decreased with 2 basis points to 2.11% compared to previous business day. The 10Y Swap decreased with 3 basis points to 2.98% 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.
House prices in the largest urban regions of the United States (US) declined on a monthly basis in August, while on a year-on-year basis growth slowed down. This was revealed by Standard & Poor’s Case-Shiller figures on Tuesday. House prices in the 10 largest regions decreased by 1.6% on a monthly basis, compared with a 0.9% decline in July. On a year-on-year basis, prices increased by 12.1% in August, following an increase of 14.9% a month earlier. The top 20 regions also show a 1.6% month-on-month decline in August, after a 0.8% decline in July. On a year-on-year basis, house prices in the top 20 regions increased by 13.1% in August. That was 16% in July.
Oil prices increased on Tuesday, after a decrease on Monday after concerns about tight supply came to the fore again. US natural gas futures increased sharply. The December futures for a barrel of West Texas Intermediate crude oil increased by 0.9% to USD 85.32 on the New York Mercantile Exchange. US natural gas futures also increased sharply, as they did on Monday, after decreasing by 23% last week. November futures increased by 8,0% to USD 5.613 per million British heat units. European November futures increased slightly to exactly EUR 100.00. As recently as August, the future reached an unprecedented high at EUR 349, when major natural gas shortages in Europe were threatened by the closure of the NordStream pipelines for Russian gas.
The German business climate decreased very slightly in October. This was revealed on Tuesday by figures from the Ifo research institute. The Ifo index for German business climate for industry and trade decreased to 84.3 this month from a revised 84.4 in September. This is the lowest reading since May 2020. However, economists had previously counted on an index decrease to 83.6. The sub-index for the current situation registered at 94.1 and for future development, the sub-index stood at 75.6.
The 6M Euribor increased with 2 basis points to 2.13% compared to previous business day. The 10Y Swap decreased with 16 basis points to 3.01% compared to previous business day.
US stock markets struggled for direction on Wednesday as a surge in Treasury yields to 14-year highs on expectations of bigger interest rate hikes dampened optimism from a bright start to the earnings season. The yield on the benchmark 10-year Treasury note climbed to its highest levels since July 2008 in a steep selloff in U.S. government bonds, with a weak U.S. housing report failing to deter investors from selling bonds.
The British pound fell on Wednesday after data showed surging food prices pushed British inflation into double digits last month, leaving investors to weigh up the outlook for interest rates after the scrapping of most of the government’s “mini-budget”. Wednesday’s consumer price index (CPI) data showed the CPI increased by 10.1% in annual terms in September.
Israel’s government is preparing to issue government bonds using a blockchain technology platform, the Tel Aviv Stock Exchange (TASE) said on Wednesday. Implementation of advanced technologies such as blockchain, the TASE said, would reduce costs, shorten the duration issuance and clearing of government bonds, improve transparency and mitigate risks.
The 6M Euribor increased with 1 basis point to 2.04% compared to previous business day. The 10Y Swap increased with 6 basis points to 3.25% compared to previous business day.
Industrial production in the United States rose faster than expected in September. This was reported by the Federal Reserve on Tuesday. Industrial production, including output from factories, mining and utilities, rose 0.4% on a monthly basis. A 0.1% increase had been expected, after a 0.1% fall in August. Earlier, a 0.2% decline was reported for the month. Capacity utilisation rose 0.2 percentage points to 80.3% in September.
Germany’s ZEW index for economic sentiment picked up more than expected in October, but remains well below zero. This was revealed on Tuesday by figures from the German research institute. The ZEW expectations index picked up from -61.9 in September to a negative reading of 59.2 this month. A deterioration to -65.0 had been forecast by economists. About the current situation, respondents actually became slightly more negative. This index fell to a reading of 72.2 negative in October from 60.5 negative a month earlier.
Producer prices in the UK rose slightly less in September again. This was revealed on Wednesday by figures from the UK statistics office ONS. On a year-on-year basis, prices rose 20.0% after a 20.9% plus in August and 22.7% in July. On a monthly basis, the price level rose 0.4% after a 0.9% decline in August.
The 6M Euribor is unchanged at 2.03% compared to previous business day. The 10Y Swap decreased with 5 basis points to 3.19% compared to previous business day.
Mortgage interest rates in the Netherlands have continued to rise since the summer. Interest rates for 20 and 30-year fixed (without National Mortgage Guarantee) now average 5% or more. This puts interest rates at the level of early 2013. And given the upcoming interest rate hikes by central banks, the end of interest rate rises does not yet seem to be in sight.
The German government wants to keep three of Germany’s last nuclear power plants on standby until April to avoid impending energy shortages. Chancellor Olaf Scholtz has asked the ministries of economy, environment and finance to make it legal for the three nuclear power plants to remain open until April 15.
The reversal of budget plans by the British government means that the Bank of England does not have to raise interest rates further, but markets expect the BoE to increase interest rates with 100 basis points to support investor confidence as much as possible. A move of 75 basis points would be considered the minimum by the market.
The 6M Euribor increased with 2 basis points to 2.03% compared to previous business day. The 10Y Swap decreased with 8 basis points to 3.24% compared to previous business day.
The executive branch of the European Union (EU) plans to propose a mechanism to reduce price volatility in the gas market and to avoid extreme price spikes in derivatives trading. The aim is to tackle the energy crisis in the EU. The temporary mechanism would impose a dynamic price cap on transactions on the Dutch Title Transfer Facility, whose main index is the benchmark for all gas trades in the continent.
Gazprom threatens to turn off the gas tap to Europe if a price cap is imposed on Russian gas exports, according to statements by Gazprom CEO Alexei Miller on Russian state television. The Group of Seven and the European Union (EU) are working on a price cap on Russian oil and gas and an import ban as part of Western sanctions imposed on Russia for invading Ukraine.
The European Central Bank (ECB) must reduce its sizeable balance sheet of around 5.1 trillion euros from 2023, according to Bundesbank president Joachim Nagel said in an interview with Bloomberg TV on Friday evening. “The size of the balance sheet is too big and shrinking the balance sheet is more or less complementary to what we need to do on the interest rate side,” said Nagel. At the end of this month, the ECB will make a new interest rate decision, with key interest rates expected to be raised again by 75 basis points.
The 6M Euribor increased with 1 basis point to 2.01% compared to previous business day. The 10Y Swap increased with 6 basis points to 3.32% compared to previous business day.
Oil prices rose on Thursday, the price of a barrel of West Texas Intermediate increased with 2% to USD 89.11. In the week ending October 7, US crude oil inventories rose by 9.9 million barrels to 439.1 million units. Furthermore, the International Energy Agency reported in its monthly report on Thursday that oil demand will rise less this year than previously anticipated.
The Amsterdam stock exchange closed higher on Thursday. US inflation turned out to be a setback, as figures showed that US consumer prices rose more than expected on a monthly basis in September. Prices rose 0.4%, following a 0.1% plus in August. These figures caused a shock reaction among investors, from which the Damrak eventually recovered. The AEX index rose 0.3% to 633.01 points.
Consumer prices in Germany increased more in September than in August. This was also revealed on Thursday by final figures from German statistics agency Destatis. On a year-on-year basis, prices rose 10.0% in September after a 7.9% rise in August. In September, prices rose 1.9% compared to August. In August, the month-on-month increase was still 0.3%. The final figures match preliminary registrations.
The 6M Euribor is unchanged at 2.00% compared to previous business day. The 10Y Swap decreased with 4 basis points to 3.26% compared to previous business day.
The average interest rate on the most popular U.S. mortgage loan rose to its highest level since 2006. This is shown by data from the Mortgage Bankers Association (MBA) on Wednesday. Mortgage rates have more than doubled since the beginning of the year as the Federal Reserve pursues an aggressive path of interest rate hikes to bring down high inflation.
The S&P 500 and the Nasdaq increased on Wednesday after a five-day decline, but inflation and rate hike worries capped the gains after a higher-than-expected rise in September producer prices. The Labor Department’s producer prices index rose 8.5% in the 12 months through September, slightly higher than an estimated 8.4% rise. The reading was still lower than the 8.7% increase in August. Persistent inflation has increased concerns about the Fed’s aggressive monetary action tipping the United States into a recession.
Canada’s main stock index extended losses to a fifth straight session on Wednesday, mostly due to declining energy stocks. The energy sector dropped 1.4%. This due to declining oil prices struck by a gloomy economic outlook and a strong dollar that outweighed supply concerns stemming from OPEC+ cutting its production target.
The 6M Euribor increased with 4 basis points to 2.00% compared to previous business day. The 10Y Swap decreased with 1 basis point to 3.30% compared to previous business day.
UK exports rose by 1.2% in August, as announced by the UK official statistics office ONS on Wednesday. Imports actually rose by 5.7% on a monthly basis. The trade deficit widened by 0.2 billion pounds in the three months to August compared to the three months to May this year, the deficit now amounts to 25.6 billion pounds.
Small business confidence in the United States continued to rise in September, as announced the National Federation of Independent Business (NFIB). The confidence index rose from 91.8 in August to 92.1 last month. In July, the index stood at 89.9.
Machinery orders in Japan fell sharply in August. This was revealed by government figures on Wednesday. Adjusted for seasonal effects, machinery orders fell 9.5% month-on-month in August. In July, orders were still up 0.3%. In the private sector, orders fell 5.8% in August, excluding volatile orders, after rising 5.3% in July.
The 6M Euribor increased with 6 basis points to 1.96% compared to previous business day. The 10Y Swap decreased with 2 basis points to 3.31% compared to previous business day.
New figures from Statistics Netherlands, het Kadaster and Eurostat show that house prices in the Netherlands in the second quarter of 2022 averaged 18.2% higher than a year earlier. This puts the Netherlands in the top five countries in the European Union with the largest increase in house prices. The second quarter did see a 10.2% drop in the number of homes sold compared to a year earlier.
Unemployment in Great Britain continued to fall to 3.5% in the three months through August, according to new figures released today by the U.K. Office of National Statistics ONS. The unemployment rate is 0.3% lower than a quarter earlier, marking the lowest level since 1974.
The price of oil for a barrel of West Texas Intermediate fell more than 1.6% yesterday to a price of $91.13. The drop is due to the general uncertainty in the market about, among other things, how the oil supply from Russia will develop with the European sanctions and a possible upcoming price cap in the European Union. In addition, it was revealed last weekend that China’s service sector has continued to shrink due to tighter corona measures which has added to concerns about the Chinese economy.
The 6M Euribor increased with 6 basis points to 1.90% compared to previous business day. The 10Y Swap increased with 13 basis points to 3.33% compared to previous business day.
Dutch production continues to rise, according to figures published by Statistics Netherlands (CBS). In August, the manufacturing industry increased by 5.9 percent compared to August 2021. In July, the increase was 5.2 percent. Growth has steadily increased over the past three months, however, is slightly lower than in the preceding months.
De Nederlandsche Bank (DNB) warns for increasing losses of Dutch banks. The reasons for this are the increased risks to financial stability in the past six months. High inflation, rising interest rates, the war in Ukraine and the possibility of a recession pose risks that create an unprecedented situation. The consequence of this could be increasing losses, according to DNB.
The start of the financial annual report season is in sight, which will start next week with the first companies opening the books. Major US banks such as Citigroup, JP Morgan Chase and Morgan Stanley will start next week. These figures can provide insight into economic developments in the US and beyond.
The 6M Euribor increased with 11 basis points to 1.84% compared to previous business day. The 10Y Swap increased with 12 basis points to 3.20% compared to previous business day.
Central banks worldwide should continue to raise interest rates despite the fragile outlook for the global economy, according to IMF director Kristalina Georgieva. The IMF will publish an update of its World Economic Outlook next week, in which the global growth forecast for 2023 will be revised downwards, Georgieva said. “We will emphasise that the risk of recession is growing”. Nevertheless, central banks must “stay on course” in their fight to bring down the highest inflation rate in 40 years, even at the risk of tightening too fast and too much.
Eurozone retail sales rose 0.3% month-on-month in August, following a 0.4% drop in July, according to figures from EuroStat published on Thursday. Compared to August last year, retail sales were 2.0% lower. Economists on average expected a 0.4% drop beforehand. The steepest decline was in the Netherlands, down 2.2%, followed by Germany, down 1.3%. On the contrary, in Belgium, sales rose by 1.4%.
Oil prices rose further on Thursday, with an increase of 1% to a price of USD 88.45 for a barrel of West Texas Intermediate. On Wednesday, OPEC+ announced a production cut of 2 million barrels a day, which market experts say will be particularly beneficial for Russia. Morgan Stanley analysts do not expect OPEC+ to actually cut production by 2 million barrels a day, but presumably by less than half of that. “Compared to September production, we estimate the impact on supply at 0.8 million barrels per day,” Morgan Stanley said.
The 6M Euribor decreased with 3 basis points to 1.73% compared to previous business day. The 10Y Swap increased with 12 basis points to 3.08% compared to previous business day.
The British pound weakened against the dollar on Wednesday, ending a six-day rally, but staying well off recent lows as British Prime Minister Liz Truss spoke at the Conservative party conference on Wednesday. Truss urged the Conservative party to stick together and help transform the economy and the country, as she fights to restore her dwindling authority after a chaotic first month in office.
Major central banks are determined to clamp down on inflation, with Australia and New Zealand delivering further interest rate hikes this week. A smaller-than-anticipated rate hike in Australia has fueled talk that global monetary tightening will slow as the growth outlook turns. Central banks in the 10 largest economies have raised rates by a combined 2,040 basis points in this cycle to date, with Japan lagging.
The World Trade Organization forecasts a slowdown of global trade growth next year as higher energy and food prices and rising interest rates curb demand.. The Geneva-based organisation said on Wednesday that merchandise trade would increase by 3.5% this year, up from its April estimate of 3.0%. However, for 2023, it sees trade growth of just 1.0%, compared with a previous forecast of 3.4%.
The 6M Euribor decreased with 2 basis points to 1.76% compared to previous business day. The 10Y Swap increased with 14 basis points to 2.96% compared to previous business day.
Eurozone producer prices again increased more in August than in the previous month. This was revealed on Tuesday by figures from Eurostat, the European statistical office. On a year-on-year basis, producer prices rose 43.3% in August, versus a plus of 38.0% in July and 36.0% in June. On a monthly basis, producer prices rose 5.0%, after a 4.0% increase in July. Excluding energy prices, producer prices rose 0.3% on a monthly basis in August. That was up 0.6% a month earlier.
Japan’s services sector grew again in September, the economy as a whole increased also. Final figures from S&P Global also showed this on Wednesday. The purchasing managers’ index for the services sector came in at 52.2 in September against 49.5 in August. The preliminary index pointed to a reading of 51.9. Japan’s purchasing managers’ index for manufacturing was found on Monday to have fallen to 50.8 in September from 51.5 in August. This nevertheless pushed the composite index up from 49.4 to 51.0, narrowly ahead of the provisional reading of 50.9.
Orders placed at US factories remained stable in August, in line with market expectations. This was revealed by US government figures on Tuesday. The unchanged level follows a 1.0% decline in July. Orders excluding defense fell 0.3% in August and those excluding transport rose 0.2%.
The 6M Euribor decreased with 3 basis points to 1.78% compared to previous business day. The 10Y Swap decreased with 6 basis points to 2.82% compared to previous business day.
The British government is abandoning controversial tax plans to scrap the top rate of income tax after all, the British Chancellor of the Exchequer announced yesterday. The plan had been announced more than a week ago but subsequently attracted widespread criticism. The idea was to cut the top income tax bracket from 45% to 40% on salaries above £150,000 a year, to ensure that the wealthiest would spend more money. The less fortunate Britons would also benefit through the trickledown effect, but many economists already doubted whether this theory would work in practice.
Figures published by the U.S. government show that construction spending in the United States fell harder than expected in August. On a monthly basis, a decline of 0.2% was expected which in reality came out to 0.7%. On an annual basis, however, construction spending in August rose 8.5%.
The Reserve Bank of Australia’s latest interest rate decision shows that Australia’s central bank is raising interest rates by another 25 basis points to 2.60%. The Reserve Bank of Australia expects inflation to increase some more in the coming period before it falls toward the targeted 2%. The bank expects inflation for 2022 to be around 7.75%.
The 6M Euribor increased with 1 basis point to 1.81% compared to previous business day. The 10Y Swap decreased with 20 basis points to 2.88% compared to previous business day.
S&P Global Ratings reported Friday evening that the outlook of the United Kingdom (UK) has been lowered from stable to negative. This is in response to the budget plans that were recently announced. As a result, S&P’s expectations have been adjusted. For example, the budget deficit is now expected to increase by an average of 2.6 percent of GDP per year up to and including 2025. In addition, the government debt is now expected to rise in 2023, while it was previously expected to fall.
The Japanese industry is growing less rapidly in September, according to figures from S&P Global and Jibun Bank. The Purchasing Managers Index fell from 51.5 in August to 50.8 in September, where an index reading greater than 50 indicates industry growth, while less than 50 signifies contraction. The weak yen is not helping and is pushing up the inflation of imports.
The energy group ENI in Italy will no longer receive gas from the Russian Gazprom this Monday. ENI is the largest importer of Russian gas in Italy. Delivery is no longer possible according to Gazprom as the regulations in the transit country Austria would have changed. The Italian minister says he can get through the winter with the current stocks if no ‘catastrophic events’ take place.
The 6M Euribor decreased with 6 basis points to 1.80% compared to previous business day. The 10Y Swap decreased with 6 basis points to 3.08% compared to previous business day.