Investors can get ready for another busy macroeconomic week with the war situation in Ukraine likely to be the main focus. The agenda opens Monday with the industrial production figure from Japan. On Tuesday we get a series of industrial purchasing managers indices from China, Europe, United States and Japan. The Australian central bank will decide on interest rate rate policy on Tuesday. On Wednesday, the US Fed will publish the Beige Book with their perspective on the current economy. OPEC+ will meet on Wednesday, the results of these discussions could set oil prices even more in motion. Russia is part of OPEC+. The minutes of the last monetary meeting of the ECB will be presented on Thursday. Friday closes the week with the German trade balance.
European stocks open deep in the red on Monday as the crisis in Ukraine continues, the West ramps up sanctions and Russia tightens its nuclear weapons arsenal. Analysts find it remarkable that the energy sector has not yet been hit hard. In France, inflation continued to rise, while consumer confidence in the eurozone weakened further in February. The Ukraine crisis may force central banks in the US and Europe to postpone their monetary cover-up to focus on supporting growth and the smooth functioning of capital markets rather than fighting rising inflation.
Selling prices of the Dutch industry rose faster in January. This was revealed on Monday from figures from Statistics Netherlands. Prices have increased by an average of 20.9 percent year-on-year last month. A month earlier, industrial products were 19.6 percent more expensive than a year earlier. The output price movements are strongly related to the price development of crude oil. In January, a barrel of crude North Sea Brent cost about 75.5 euros, more than 66 percent higher than a year earlier.
The 6M Euribor is unchanged at -0.48% compared to previous business day. The 10Y Swap increased with 7 basis points to 0.88% compared to previous business day.
The United States and the European Union have imposed harsh sanctions on Russia following the attack on Ukraine, but Russia will not be excluded from the SWIFT payment system for the time being. This was announced by US President Joe Biden at a press conference last night. Approximately 11,000 banks are connected to the SWIFT payment system and it plays a crucial role in enabling payments to be made quickly and reliably around the world. By excluding Russia, it will hit the entire Russian economy very hard and many Western leaders therefore also see it as the most severe economic sanction.
The confidence of Dutch manufacturers in the industrial sector fell slightly in February. This is evident from data from Statistics Netherlands published this morning. The index came out at 8.5 in February, a decrease of 0.5 compared to the position in January. The average for the past 20 years is significantly lower at 0.8. Thus, in general, producers are still positive about the industrial sector. Over the past 4 years, producer confidence reached its lowest point in April 2020 at a reading of -28.7. Since then, confidence has steadily increased to 12.7 in November 2021.
Between February 12 and February 19, 232,000 initial jobless claims were filed in the United States. As a result, the number of new applications fell by 17,000 from a week earlier. Analysts had previously predicted a decline of 14,000. The actual development of the number of applications is thus in line with analysts’ expectations. The total number of applications also remains around the level of before the corona pandemic.
The 6M Euribor increased with 1 basis point to -0.48% compared to previous business day. The 10Y Swap decreased with 3 basis points to 0.81% 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.
Consumer prices in the eurozone increased further in January. This was the conclusion of the final figures reported by the European statistical office Eurostat on Wednesday. The inflation rate in January was 5.1%. In December it was 5.0% and in November 4.9%. Core inflation, an important indicator for the ECB, was 2.3% on an annual basis in January. This was also in line with an earlier estimate. Excluding volatile prices for food, energy and alcohol, inflation was 2.6% in December. Annual inflation was 7.6% in the Netherlands and 0.5% on a monthly basis.
US stock markets fell on Wednesday, after the three major US benchmarks appeared to be recovering from losses a day earlier. The leading S&P 500 index fell 1.8% to 4,225.61 points, the Dow Jones index lost 1.4% at 33,132.29 points and the Nasdaq closed 2.6% lower at 13,037.49 points.
Sales of commercial vehicles in the Netherlands fell sharply in January. This was reported by the European branch organisation for the automotive industry ACEA on Thursday. The number of new commercial vehicles sold in the Netherlands last month fell by 16.4% year-on-year to 6,998 units. In the European Union, sales fell 11.1% in January to 125,292 vehicles. Germany and France, countries that lead the European Union in terms of volumes, also showed declines. Sales in Germany were down 3.1% in January and 17.0% in France.
The 6M Euribor decreased with 1 basis point to -0.49% compared to previous business day. The 10Y Swap increased with 1 basis point to 0.84% 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 EU has imposed sanctions on several hundred members of the Russian parliament, some banks and businessmen with relations with Putin. The EU was united on Tuesday evening in condemning Russia’s decision to recognize and provide military support to two separatist regions in eastern Ukraine. Previously, the United Kingdom had blacklisted five banks and a large group of parliamentarians. US President Joe Biden spoke of a Russian invasion and decided to deny the country access to international capital markets.
The Russian central bank has promised to do everything it can to keep the ruble exchange rate stable. The pledge followed after news that President Vladimir Putin unilaterally decided to send “peacekeeping troops” across the Ukrainian border and occupy two eastern regions that have declared themselves independent from Ukraine.
Consumer confidence in the United States fell in February, according to an index published by the American Conference Board. The index stood at 111.1 in January, while the current reading is 110.5. The Conference Board says in a statement that the decline is due to concerns about inflation.
The 6M Euribor increased with 1 basis point to -0.48% compared to previous business day. The 10Y Swap increased with 3 basis points to 0.83% 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.
European stock markets closed with losses yesterday. Closing at 454.81 points, the Stoxx Europe 600 was in decline by 1.3%. The German DAX decreased by 2.1%, the British FTSE 100 saw a decrease of 0.4% and the French CAC 40 also fell by 2.0%. The markets are reacting to the geopolitical situation regarding Russia and Ukraine. On the Ukrainian border five people were said to be killed and President Putin recognized the independence of the self-proclaimed People’s Republics of Donetsk (DNR) and Lugansk (LNR) in eastern Ukraine.
Figures from CBS and the Land Registry showed today that existing Dutch owner-occupied homes became substantially more expensive again in December. In January, the price of residential property increased 22.1% compared with a year earlier. In December, the increase was still 20.4%. This is the largest price increase since these statistics began in 1995. The volume of transactions did decline, given that 14,053 housing transactions were recorded in January, which is 43% less than a year earlier.
According to the German Bundesbank, the outlook for the German economy is good, and the economy is expected to pick up in the coming months. This is on the condition that the pandemic is mitigated and the problems in the supply chain are reduced. High inflation is expected to continue, partly because of rising energy prices.
The 6M Euribor decreased with 1 basis point to -0.49% compared to previous business day. The 10Y Swap increased with 2 basis points to 0.80% compared to previous business day.
The Japanese economy experienced another sharp contraction in the services sector in February, while the manufacturing sector is now also declining. This was revealed on Monday from a preliminary figure from Markit. The index, which measures the activity of the country’s services sector, stood at 42.7 in February from 47.6 in January. Japan’s manufacturing purchasing managers’ index also fell from 54.8 in January to 48.7 in February. The composite index has fallen from 49.9 to 44.6.
The threat of war in Eastern Europe continues to cause uncertainty among investors. The US Secretary of State and his Russian counterpart will meet later this week. The US is conditional on Russia not invading Ukraine in the meantime. In addition, consumer confidence in the eurozone fell 8.8 percent in February.
In Germany, producer prices also rose sharply in January. This was revealed on Monday from figures from Destatis, the German statistical office. Compared to last year, producer prices for January rose by 25.0 percent. On a monthly basis, January experienced a price increase of 2.2 percent.
The 6M Euribor decreased with 2 basis points to -0.48% compared to previous business day. The 10Y Swap decreased with 2 basis points to 0.78% compared to previous business day.
Dutch consumers’ confidence in the economic climate fell again in February. This is evident from data from Statistics Netherlands published this morning. The index was -30 in February, a decrease of 2 points compared to January. The average of the past 20 years is significantly above this, at -8. Over the past 4 years, consumer confidence reached its lowest point in May 2020 at a reading of -31. Since then, confidence has risen steadily to -5 in September 2021. Subsequently, a sharp decline is visible.
Between February 5 and February 12, 248,000 initial jobless claims were filed in the United States. This means that the number of new applications unexpectedly rose by 23,000 from a week earlier. Analysts had previously predicted a decline of 7,000. Despite the unexpected increase, the number of initial jobless claims remains approximately at pre-corona levels.
The price of oil (West Texas Intermediate) fell significantly again yesterday for the first time in weeks, falling 2% to USD 91.76. According to analysts, the ongoing conflict between Russia and Ukraine is pushing up prices, but positive news regarding the upcoming nuclear deal with Iran pushes prices down. When this agreement is finalized, Iran will be allowed to start exporting oil again, which means that a substantial increase in the supply of oil is possible in the near future.
The 6M Euribor is unchanged at -0.46% compared to previous business day. The 10Y Swap decreased with 2 basis points to 0.80% compared to previous business day.
Industrial production in the United States grew more strongly in January than previously expected. This was reported by the American Federal Reserve. The index for the production of manufacturing, mining and utilities rose by 1.4%, after a decline of 0.1% in December. Economists expected a rise of 0.5% in January. The capacity utilisation rate rose to 77.6% in January from 76.6% in December, whereas a rate of 76.7% was forecast.
The stocks of crude oil in the United States increased last week. This was reported by the American energy agency EIA on Wednesday. In the week ending on 11 February, crude oil stocks increased by 1.1 million barrels to 411.5 million. Gasoline stocks decreased by 1.3 million barrels to 247.1 million barrels. Fuel oil and diesel stocks decreased by 1.6 million barrels to 120.3 million. The refineries’ capacity utilisation rate was 85.3%, compared to 88.2% a week earlier.
Unemployment in the Netherlands declined further in January. This was shown Thursday by figures from Statistics Netherlands (CBS). Unemployment decreased to 3.6% of the labour force. In December, unemployment was still 3.8%. In the past three months, the number of unemployed decreased by an average of 9,000 per month. This brought the number of unemployed to 354,000 in January 2022, which is 3.6% of the labour force. The number of employed people aged 15 to 75 increased in the same period by an average of 26,000 per month to 9.4 million people. The increase in the number of employed people was particularly large among young people.
The 6M Euribor decreased with 1 basis point to -0.46% compared to previous business day. The 10Y Swap decreased with 4 basis points to 0.82% compared to previous business day.
US producer prices rose 9.7% in January from a year earlier. In addition, the month-on-month increase compared to December was the highest in eight months. The increase is a new signal of persistent inflation that is likely to force the US central bank system to raise interest rates in March.
Preliminary calculations published by Statistics Netherlands (CBS) show that the Dutch economy has grown by 4.8% in 2021. Thereby, the contraction in the recession year 2020 has been more than made up for. CBS does point out that these figures are surrounded by greater uncertainty due to the corona crisis.
Turkish President Erdogan discussed the major benefits for investment in his country during a visit to the United Arab Emirates on Tuesday. Several trade agreements were concluded during the visit – the first since 2013 after a long period of animosity, Reuters reported. Inflation is currently very high and the country has seen strong declines in lira exchange rates.
The 6M Euribor increased with 1 basis point to -0.45% compared to previous business day. The 10Y Swap decreased with 1 basis point to 0.86% compared to previous business day.
The S&P500 and Dow Jones index both closed yesterday with decreases of 0.4% and 0.5% respectively. The Nasdaq was unchanged at 13,790.92. Due to concerns about the threat of war in Eastern Europe, it was a volatile trading day. No breakthrough could be made this weekend with the phone calls between US President Biden and Russian President Putin regarding the conflict. This Monday, Russian Foreign Minister Lavrov indicated that the crisis could be resolved diplomatically. An invasion will have a negative effect on the markets that investors are already incorporating, said Lars Skovgaard Andersen of Danske Bank.
The price of oil has risen to over USD 95. This price has not been reached since 2014. A barrel of West Texas Intermediate increased 2.5% in price Monday, settling at USD 95.46.
Japan’s economy recovered in the fourth quarter from contraction in the previous quarter. GDP grew by 1.3% on a quarterly basis. In the third quarter, the economy of Japan had still shrunk by 0.9%. If the latest figures are compared with a year earlier, it still is a growth of 5.4%. The Japanese figures on industry were also published. Here the Japanese Ministry of Trade and Industry indicated that on a monthly basis Japanese industry produced 1.0% less than a month earlier. On an annual basis, however, production still increased by 2.7%.
The 6M Euribor increased with 1 basis point to -0.46% compared to previous business day. The 10Y Swap increased with 1 basis point to 0.87% compared to previous business day.
For this week corporate results will once again be dominant, while the macroeconomic agenda is also quite busy. For Tuesday, investors are mainly paying attention to a series of Japanese data, growth in the eurozone and the German ZEW index. Inflation figures in the UK and China are on the agenda mid-week. Production figures from the industry are reported in America and minutes from the Federal Reserve are scheduled. On Thursday weekly support requests in the US and for Friday consumer confidence in the eurozone are scheduled.
The threat of a Russian invasion of Ukraine has impact on the capital markets. Oil prices are reacting sharply to the Russian threat. Some oil analysts point out that the threat of an invasion alone has already achieved Putin’s target of induced impact on oil and gas prices. About sixty percent of the Russian state budget comes from oil and gas imports. An actual invasion could push the oil price towards $100 or even higher, according to analysts.
The 6M Euribor decreased with 1 basis point to -0.47% compared to previous business day. The 10Y Swap increased with 4 basis points to 0.86% compared to previous business day.
Inflation in the United States (US) in January was 0.6% on a monthly basis and 7.5% on an annual basis, the highest measured inflation in the US in almost 40 years. This was reported yesterday by the US Department of Labor. It also exceeded the expectations of several economists. Inflation was predicted to be 0.4% on a monthly basis and 7.2% on an annual basis. Core inflation, adjusted for food and energy prices, came in at 6.0% in January compared to January 2021. Energy and food prices rose by an average of 27.0% and 7.0%, respectively.
The number of bankruptcies in the Netherlands decreased in January this year. Statistics Netherlands reported this morning that 110 bankruptcies were declared in January. This is a decrease of 23 compared to the 133 bankruptcies of December 2021. Behind August 2021 and October 2021, January 2022 saw the lowest number of bankruptcies recorded in over 30 years.
Between January 29 and February 5, 223,000 initial jobless claims were filed in the United States. This meant that the number of new applications fell by 16,000 from a week earlier. Analysts had previously predicted a decline of 9,000. Since the peak in applications in January 2021 of 904,000, the number of new applications has steadily declined. In December 2021 and January 2022, the number of applications picked up due to the spread of the omicron variant, but now that the number of applications is dropping for the third week in a row, the decline seems to have resumed.
The 6M Euribor is unchanged at -0.46% compared to previous business day. The 10Y Swap increased with 9 basis points to 0.82% compared to previous business day.
German exports rose in December, but not as fast as imports. This was reported by the German statistical office Destatis on Wednesday. Exports increased by 0.9% on a monthly basis. Imports increased by 4.7%. On an annual basis, exports increased by 15.6% in December. Imports rose by 27.8%. The German trade balance, or the sum of exports and imports, showed a seasonally adjusted surplus of EUR 6.8 billion in December. This was expected to be EUR 12.8 billion. In the whole of 2021, this was EUR 173.3 billion.
The Japanese government is sending additional ships with liquefied natural gas (LNG) to Europe after many requests from the United States and Europe to help out. Due to the ongoing tensions between Ukraine and Russia, the price of gas has increased sharply in recent months, with fears that if it escalates, it could lead to further disruptions in gas supplies from Russia. Additional supplies from Japan will provide some relief on the currently tight gas market.
Wholesale inventories in the United States rose more than expected in December. This was announced by the US Department of Commerce on Wednesday. On a monthly basis, stocks increased by 2.2%. The first estimate was still based on an increase of 2.1%. In November, wholesale inventories increased by a revised 1.7%. The year-on-year increase in stocks in December was as high as 18.5%. Wholesale sales increased 0.2% month-on-month in December. Compared to December 2020, there was an increase of 21.8%.
The 6M Euribor is unchanged at -0.46% compared to previous business day. The 10Y Swap decreased with 4 basis points to 0.73% compared to previous business day.
Figures from the US Department of Commerce show that the US trade deficit widened in December. The deficit rose from USD 79.3 billion in November to USD 80.7 billion in December, an increase of 1.8 percent. The figure is known to be volatile.
India’s central bank is expected to hold its repo rate steady on Thursday, but a poll by Reuters showed that economists are expecting an increase in the reverse repo rate as part of a process to reduce surplus liquidity poured into markets earlier in the pandemic. A three-day meeting of the Reserve Bank of India’s monetary policy committee is set to end on Thursday, having been delayed after Maharashtra state declared a day of mourning on Monday following the death of legendary singer Lata Mangeshkar.
On a joint news conference with German Chancellor Olaf Scholz, U.S. President Joe Biden said that there would no longer be Nord Stream 2 when Russia invakes Ukraine. When asked to specify how he would go about ensuring the controversial pipeline would not be used, Biden assured that the U.S. would be able to bring it to an end. The United States and Germany have sought to present a united front against potential Russian military aggression in Ukraine, with Biden declaring the two in “lockstep” despite questions over Berlin’s commitment to scuttle the important energy pipeline.
The 6M Euribor increased with 1 basis point to -0.46% compared to previous business day. The 10Y Swap increased with 7 basis points to 0.77% compared to previous business day.
The U.S. stock markets closed almost all with losses yesterday. The Dow Jones remained flat at 35,091.13 points, and the S&P500 fell 0.4% to 4,483.87. The Nasdaq fell to 14,015.67 points, seeing a decline of 0.6%. Few macroeconomic figures and corporate results were published yesterday, making it a quiet start to the week.
Only the publication of U.S. consumer credit came out. Consumer credit increased sharply in December, rising by USD 18.9 billion. One month before, the increase was still USD 38.9 billion. In terms of macro figures, the main focus is on next Thursday afternoon when the U.S. inflation figures will be published.
The prices of oil fell yesterday. This is the first time in weeks of an upward trend in oil prices, which even reached the highest level in seven years. Negotiations on a nuclear deal between the United States and Iran have had their impact on this development. Should the deal be concluded, it will result in the lifting of sanctions imposed by the US. This will allow Iran to offer oil on the market again, increasing supply and lowering the price.
The 6M Euribor increased with 3 basis points to -0.47% compared to previous business day. The 10Y Swap increased with 6 basis points to 0.70% compared to previous business day.
The high inflation is worrying for the purchasing power of the average Dutch person. The European Central Bank plans to raise interest rates for the first time by the end of this year, according to Klaas Knot. About 60% of higher inflation is attributable to energy. The Central Bank indicates that the vast majority of inflation comes from abroad. This means that the Netherlands has become less prosperous as a country. Inflation in the eurozone will largely be above 4 percent this year.
Investors look back on a busy week with concerns over ongoing inflation, central bank decisions, disappointing US tech data and a better-than-expected US jobs report. The Bank of England has again raised interest rates by 25 basis points to 0.50 percent, in line with expectations of increasing inflation. The US jobs report has provided positive surprises. The figures show that the number of jobs increased by 467,000 in January.
European companies have never before had to pay so much for their CO2 emissions. The price for European emission rights, with which companies pay for their pollution, is 96.45 euros per tonne of CO2. Part of the price increase is a result of higher gas prices. According to analysts, many investors are speculating on a further increase in emission rights. CO2-saving measures can now almost or completely cover costs, given the sharp price increases.
The 6M Euribor is unchanged at -0.50% compared to previous business day. The 10Y Swap increased with 6 basis points to 0.64% compared to previous business day.
The ECB announced yesterday that it would not change its monetary policy. The deposit rate will therefore remain negative at 0.50%, the policy rate at 0.00% and the marginal lending rate at 0.25%. In March, the ECB will decide on the policy rates again. The ECB has announced that it will be scaling back its buying policy. The Pandemic Emergency Purchase Program (PEPP) will stop at the end of March and the Asset Purchasing Program (APP) will serve as a bridging measure. Under the APP, EUR 40 billion per month of bonds will be purchased in the second quarter of 2022, EUR 30 billion per month in the third quarter and up to EUR 20 billion in the fourth quarter. Thereafter, this rate will be maintained as long as necessary.
Between January 22 and January 29, 238,000 initial jobless claims were filed in the United States. As a result, the number of new applications fell by 23,000 from a week earlier. Analysts had previously predicted a decline of 16,000. Last month, applications rose weekly due to the rapid spread of the omicron variant, but the number of new infections in the U.S. is now steadily declining. The four-week moving average also fell, by 7,750 to 225,000 applications.
The price for a barrel of crude oil closed higher than USD 90 per barrel yesterday for the first time since October 2014. The explanation for the price increase may be the fact that OPEC+ has stuck to its plans to increase oil production by 400,000 barrels each month. However, OPEC+ has not yet been able to achieve the intended increase. Another explanation for the price increase is the increased tensions between Russia and Ukraine.
The 6M Euribor is unchanged at -0.50% compared to previous business day. The 10Y Swap increased with 8 basis points to 0.58% compared to previous business day.
Consumer prices in the eurozone increased more strongly in January than was forecast. This is reported by the European statistics office Eurostat . The inflation rate in the eurozone was 5.1% in January. In December this was 5.0% and in November 4.9%. Economists had forecasted an inflation rate for January of 4.3%. The core inflation, an important measure for the ECB, was 2.3% year-on-year in January. Excluding volatile prices for food, energy and alcohol, inflation was 2.6% in December. In the Netherlands, annual inflation was 7.6% and the monthly inflation 0.4%.
Private sector employment in the United States unexpectedly contracted in January. This is reported by the American payroll processor ADP based on new figures. The number of jobs decreased in January by 301,000 jobs. Economists had expected a growth of 200,000 jobs. It is the first decline since December 2020. In December 2021, the number of jobs grew by 776,000. Initially, ADP reported a growth of 807,000 jobs in December.
The stocks of crude oil in the United States decreased last week. This was reported by the American energy agency EIA on Wednesday. In the week ending 28 January, crude oil inventories decreased by 1.0 million barrels to 415.1 million. In contrast, gasoline stocks increased by 2.1 million barrels to 250.0 million barrels. Fuel oil and diesel stocks decreased by 2.4 million barrels to 122.7 million. The refineries’ capacity utilisation rate was 86.7%. A week earlier, this was 87.7%.
The 6M Euribor increased with 1 basis point to -0.50% compared to previous business day. The 10Y Swap increased with 2 basis points to 0.50% compared to previous business day.
Data provider Refinitiv reports that companies announced USD 364 billion in acquisitions globally in January. That is the third busiest start to the year since the first observation in 1980. Last year a record was set, with more than USD 5600 billion in company acquisitions worldwide.
India unveiled a higher budget of 39.45 trillion rupee (USD 529.7 billion) for the coming fiscal year, stepping up investment on highways and affordable housing to put growth on a firmer footing as the economy recovers from the pandemic. The government has projected GDP growth at 8% to 8.5% compared with an estimated 9.2% for the current fiscal year and a 6.6% contraction in the previous year.
The index of national factory activity of the Institute for Supply Management fell to a 14-month low in January amid an outbreak of COVID-19 infections, supporting views that economic growth lost steam at the start of the year. The index still indicates expansion of manufacturing, which accounts for 11.9% of the U.S. economy.
The 6M Euribor increased with 1 basis point to -0.51% compared to previous business day. The 10Y Swap increased with 2 basis points to 0.48% compared to previous business day.
Figures from the German statistics office showed that German retail sales decreased significantly in December. Adjusted for inflation, sales decreased by 5.5% in December. This is considerably more than expected, as economists predicted a decrease of only 1.3%. On a year-to-year basis, sales remained constant.
The Reserve Bank of Australia’s interest rate decision showed that the Australian central bank will stop buying bonds and will keep the policy rate at 0.10%. The Australian central bank’s balance sheet increased threefold to a total of AUD 640 billion as a result of the buyback program. The decision to keep the policy rate at 0.10% is independent of the ending of the buyback program. The bank only expects to adjust the interest rate when the inflation rate will be between 2% and 3% for a longer period of time. Currently, inflation stands at 3.5% due to increased prices for new homes and fuel, and disruptions in the supply chain.
On Monday, oil prices rose to a settlement of USD 88.15 for a barrel of West Texas Intermediate, which is an increase of about 1.5%. For the entire month of January, the WTI price is up 17%, and a barrel of Brent oil is up 13% in price. Tensions between Ukraine and Russia are supporting oil prices in the big increase.
The 6M Euribor is unchanged at -0.52% compared to previous business day. The 10Y Swap increased with 4 basis points to 0.46% compared to previous business day.