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parity euro dolar

In the World, World economy 15th March 2023

Litmus test for American and European inflation will be between April and July, when March-June data is published

Bankinter | The US inflation published today is for February, so we should not expect it to ease because it still compares with months in 2022 before the invasion of Ukraine and, therefore, before the sharp price rises. That means that the real litmus test for inflation (both American and European) will take place between April and July, when the March-June records are published. It was in those months that…

silicon valley bank

World economy 13th March 2023

SVB: everything everywhere all at once?

By Greg MA Hirt, Global CIO, Multi Asset, AllianzGI | Last week Silicon Valley Bank (SVB), a bank that specialized in the financing of technology start-ups, came under tremendous difficulties due to massive mark-to-market losses on its portfolios of long-duration bonds, triggering a wave of deposit outflows. This was followed by high market volatility – especially in the US banking sector – with S&P 500 banks shedding more than 15%…

Li Quiang

In the World, Relevant News Item 13th March 2023

New Chinese Premier Li Qiang believes 5% growth target ‘will not be easy’

Link Securities | In his first press conference after becoming China’s new premier, Li Qiang said it will not be easy for China to reach the 5% growth target, and that it will require redoubled efforts. Li reiterated the specific policies developed last December at the Central Economic and Labour Conference (CEWC) and prioritised stability in growth, prices and employment. In addition, Li said China will coordinate macroeconomic policies by…

Biden ursula

World economy 12th March 2023

US and EU initiate steps to resolve Inflation Reduction Act dispute

Banca March | As part of today’s meeting between Von der Leyen and Biden at the White House, the two leaders are to discuss a plan to reduce dependence on China, including an agreement on the extraction of critical minerals such as lithium and nickel. While the arrangement would not be a free trade agreement, it would allow the EU to meet the standards required to qualify for Inflation Reduction…

Haruhiko Kuroda

World economy 10th March 2023

Kuroda’s farewell

The Bank of Japan (BoJ) early this morning left its key short-term interest rates unchanged at -0.1% and its 10-year bond yields near 0% by a unanimous vote at its March meeting. The central bank also made no tweaks to its yield control curve, which includes a 0.5% cap on bond purchases, tempering views that monetary policy side effects need to be addressed soon. Meanwhile, BoJ board members signalled their…

adidas kanye west

Companies, In the World 10th March 2023

Breaking with rapper Kanye West and drop in Chinese sales cause Adidas to lose €724M in 4Q22

Norbolsa : The company publishes pre-announced results. It registers an operating loss in Q4 of €724M due to the effect of breaking the agreement with the rapper Kanye West and with sales in China falling by 50% in the quarter. Gross margin was 39.1%, affected by higher supply costs and higher discounts. It estimates an operating loss of €700m in 2023 due to inventory provisions and extraordinary costs. It considers…

Curve

World economy 9th March 2023

Market sees recession: 2/10 year US bond curve inverted by more than one percentage point for first time in 40 years

Ana Racionero (Intermoney) | A Fed rate hike to 6%, a level whose risks have long been hedged in the options market, is starting to look less and less far-fetched. Powell’s appearance before the Senate yesterday unleashed a tsunami that sent bonds on both sides of the Atlantic tumbling, causing traders to recalibrate rate levels. The swap market raised the interest rate for the Fed’s September meeting to 5.60% and,…

Bonds and pricing

World economy 7th March 2023

Fixed income outlook: harnessing a higher for longer conviction

By Franck Dixmier, Global CIO Fixed Income, AllianzGI | A shifting outlook for inflation, interest rates and economic growth is creating a complex market environment. But we think investors may now be starting to come around to our belief that interest rates are likely to have to stay higher for longer to tame sticky inflation. With the prospect of further near-term market instability, investors may want to consider remaining flexible…

Xi Jinping

World economy, World politics 6th March 2023

China’s 2023 Government Work Report: Safe growth target contrasts with bold employment objective

Alicia García Herrero (Natixis) | Against the backdrop of the recent reopening after three years of zero-Covid policies, the Chinese government, in the last government report of Prime Minister Li Keqiang during the Two Sessions, has set a GDP growth target of around 5% in 2023. Such a target is lower than our growth forecast of 5.5% for 2023, and lower than last year’s government target (5.5%). This is somewhat…

interest rates

World economy 2nd March 2023

Under the surface, the impact of higher rates is undeniable

Morgan Stanley | Despite the fastest tightening cycle in recent history, US macro has shown signs of strength, leading many investors to perceive the lack of a slowdown as a sign that the economy has been less affected by monetary policy than initially expected. In this sense, E. Z. acknowledges that activity has generally held up well, but under the surface, the impact of higher rates is undeniable. Although factors…