Market movers today
Markets will continue to monitor Brexit developments and whether there is any breakthrough in the negotiations between PM May and Labour leader Jeremy Corbyn .
In the euro area, we get minutes from the March ECB meeting , where the ECB announced a new series of TLTRO3, opened the door for further easing and extended the forward guidance to rates to the end of 2019. We are particularly interested in the details of the discussion of the TLTRO3 announcement from members of the Governing Council. Judging from recent communication, the ECB has become increasingly concerned about the side effects of a prolonged period of negative rates on bank profitability. However, we do not expect a discussion on a tiered deposit system to already have taken place. At 08:00 CEST, we also get German factory orders for February, which we will monitor given the weakness seen in the German manufacturing sector lately.
In the US , Fed’s Mester and Harker are speaking in the evening.
Selected market news
Despite a late rally in the US session sending S&P500 to the highest close since early October, risk sentiment in the Asian session has been fairly mixed this morning. 10Y Treasury yields continue to hover just above 2.50%, EUR/USD is little changed (see FX section) and Brent Crude remains below USD70/bbl.
Late yesterday evening, the UK House of Commons narrowly backed a bill to stop a no-deal exit by 313 votes to 312. The legislation was opposed by May and the Conservative group of hard brexiteers who want a clean break with the EU on 12 April. The bill will now move to the upper chamber of Parliament to be completed today. GBP was little changed.
The vote followed the kick-off of historical cross-party negotiations between May and Corbyn that has infuriated many pro-Brexit Conservatives and which yesterday led to the resignation of two ministers. Both parties stated the initial talks were “constructive” yet also “inconclusive”. Both sides are preparing for a full day of negotiations today. A key topic will be that of the customs union, which the Labour Party would like but which in many ways invalidates the arguments of a Brexit in the first place.
According to Bloomberg , the US is said to be setting 2025 targets for China to fulfil trade pledges, which should involve commitments on commodity purchases and allow US companies to wholly own enterprises in China. The trade negotiations continue in Washington today.
In Norway, house price data from Real Estate Norway showed a March rise of 0.3% m/m s.a. This was slightly higher than most Nordic houses had called for yet in line with Norges Bank’s revised projection. Generally, there is still a widespread expectation among economists that house prices will rise modestly this year as higher supply, higher mortgage rates, lower population growth and tight regulation are countered by a strong rise in real disposable income growth and high activity. We still pencil in the next rate hike from Norges Bank in June and another one in December this year.
