Starting Sunday is a two-week period of heightened political discourse, if not exactly debate, among the top echelons of China's Politburo, also known as China's "two sessions." Its outcome will likely have major economic (and thus political) consequences for the rest of the world.
"Inflation will soon become a main concern for investors... this will change the basic relationship between stocks and bonds and could set up the financial markets for severe turmoil, like in the late 1990s when the collapse of Long-Term Capital Management sent shock waves around the globe."
We discuss European Monetary Policy in this video, and how Mario Draghi is well behind the inflation curve in Europe. Core Inflation in Europe and Germany has never been a reliable inflation reading metric in Europe.
"Using the results from the Fed staff's work, and assuming that there results can be extended linearly, a recession that is half as severe would require the Fed to undertake a $1tn QE program in 2020."
"Fed Chair Yellen said today that a rate increase at the March FOMC meeting “would likely be appropriate”, as long as incoming data continue to confirm officials’ outlook. We see this as a strong signal for action at the upcoming meeting, and have raised our subjective odds of a hike to 95%."
World stocks pulled back from all time highs, and European bourses initially followed U.S. futures and Asian shares lower, however both European risk sentiment as well as E-Minis rebounded after an Odoxa poll showed Macron overtaking Le Pen in the 1st round for the first time, and that the addition of Juppe instead of Fillon may see a 2nd round run-off between Macron vs Juppe, leading to a slump in Bund futures to session lows, and a bounce in European stocks.
Eurozone headline inflation hit two percent this week, and that has the inflation hawks in Germany screaming. Yet, ECB president Mario Draghi has promised to maintain QE asset purchases, and Italy has no other real buyer for its bonds. What’s Draghi to do?
The cost of funding for your average joe, average corporation, and average swaps trader, surged overnight. 3M Libor rose by the most since Dec 2015 (Fed rate hike) to the highest level since April 2009.
Following a series of "hot" inflation prints from Germany's states, moments ago German inflation rose more than expected, printing at 2.2% above the 2.1% consensus estimate, up from 1.9% in January and surpassing the ECB's target of a rate just under 2 percent for the first time since August 2012, the peak of the Eurozone debt crisis.
In the latest warning that Beijing hopes to tighten financial condition, Reuters reported that China plans to target broad money supply growth of around 12% in 2017, down from the 13% target in 2016, signaling a bid to contain debt risks while keeping growth on track.