Market information Friday March 18th 2016

On Thursday the central banks have a slightly pessimistic view on the (near) future. The Bank of England (BoE) is afraid of the consequences of a brexit. The upcoming referendum in June causes a lot of uncertainty. Opponents of a brexit, like David Cameron, warn for the economic consequences. Compared to other European countries the weakening of the British economy is relatively limited. Given that there is no significant risk of inflation, the BoE continues her interest policy of the past seven years and the easing policy of 375 billion pond.

The Swiss National Bank (SNB) decided, like the BoE to continue her easing policy. Which means the interest rate on deposits will stay at -0.75%. The Swiss national bank is concerned about its competitive position for its export markets. The relatively expensive Franc is the reason that the governor of the SNB, Thomas Jordan, decreased the expected economic growth from 1.5% to 1% and expects an deflation of 0.8%, instead of 0.5%. In case the Franc gets too expensive the Swiss monetary authority announced to be ready to step in.

Oeystein Olsen, the governor of the Norges Bank, decreased the interest rate to 0.5%. The biggest oil producer of western Europe feels the effects of the shocks in the oil prices. Further decreases and even negative rates are possibilities in order to keep Norway out of a recession.

After the announcement of the Fed earlier this week, the euro continued to increase in value. At the closing of the European markets, the euro was worth 1.1329 dollar. Which by itself is good for the export of American companies. The Conference Board increased its outlook of the coming three to six months on the American economy by 0.1%. After a rally of oil and other commodities yesterday, American oil topped for the first time in 2016 the 40 dollar per barrel, the American markets closed with a profit. Of which the Dow Jones reached its highest point in 2016 and closed on 17.481,49 (+0.9%).

The 6M Euribor remained unchanged at -0.13%. The 10Y Swap decreased with 4 basispoints to 0.58%.

In the attachment, today’s market data on money and capital market rates as well as other rates are presented. For more history of these rates or other rates feel free to ask: update@zanders.eu.