Tag Archives: Inflation

UPDATE 2-German yields rose, reversing after industrial output supported the rally | Instant News


* Eurozone suburban government bond yields tmsnrt.rs/2ii2Bqr (Adding details, updating prices)

LONDON, April 14 (Reuters) – German government bond yields climbed to a two-week high in late trading Wednesday, unleashing earlier rallies as manufacturing and industrial data in the eurozone and Japan hinted at hurdles ahead as the global economy battles the coronavirus pandemic.

Eurozone industrial output decreased in February after increasing in January, and Japanese machinery orders fell the most in about a year.,

Eurozone bond yields – which tracked US Treasury yields higher on hopes for a strong economic recovery later this year and higher inflation – initially fell.

But that turned around and the yield on German 10-year bond, the benchmark for the single currency bloc, rose to its highest level in more than two weeks in Wednesday night trading at -0.264%, above the level touched on Tuesday when a flurry of bond sales weighed on markets. . .

Bond yields also picked up, with a number of Federal Reserve speakers scheduled for Wednesday after the inflation data beat expectations slightly.

Dallas Federal Reserve Bank President Robert Kaplan reiterated his view that the Fed should start attracting support from the economy sooner than most of his colleagues thought.]

“The overall picture is for a hike in yield,” said ING rate strategist Antoine Bouvet.

“A lot of people believe that a strong recovery is in prices, but this is down to the Fed’s communications – the start of the tapering debate needs to take place this year given the potential strength of the recovery.”

The eurozone economy still stands on “two crutches” of monetary and fiscal stimulus, and this cannot be picked up before a full recovery, said European Central Bank president Christine Lagarde.

Some policymakers have expressed hope the ECB can start reducing bond purchases in the third quarter as the COVID-19 vaccination rate increases.

In the primary market, Ireland hired a syndicate of banks to sell 20-year bonds, which will raise 2-3 billion euros according to market sources.

The government resumed its long-term bond issuance after the issuance subsided with a February bond sell-off, with Austria and Spain selling 50 and 15-year bonds respectively on Tuesday.

The European Union also announced plans for an 800 billion euro recovery fund loan on Wednesday, which will raise about 150 billion euros per year from the end of this year.

Reporting by Abhinav Ramnarayan, additional reporting by Yoruk Bahceli; Edited by Ana Nicolaci da Costa, Kirsten Donovan and John Stonestreet

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Australia, NZ dlrs rally as risk sentiment holds up from the US inflation test | Instant News


SYDNEY, April 14 (Reuters) – The Australian and New Zealand dollars pushed higher Wednesday as global markets refused to be spooked by a well-marked surge in US inflation, sending Treasury yields lower and damaging the US dollar.

The Aussie strengthened to $ 0.7657, having rallied off support at $ 0.7585 overnight. It will need to clear resistance at $ 0.7677 to end the stalemate seen in recent weeks.

The kiwi dollar rose 0.4% to $ 0.7080, extending its bounce off support around $ 0.7005 overnight. It broke through the stiff chart resistance at $ 0.7070, the barrier that has held for the past three weeks, and opened the doors to $ 0.7140 / 60.

The Reserve Bank of New Zealand (RBNZ) previously didn’t surprise anyone by keeping interest rates at 0.25% and keeping its bond-buying program at its policy meeting.

The message was again dovish, with the bank noting that the economy has slowed recently and that prolonged stimulus will be needed to raise employment inflation to desired levels.

“We are more bullish and expect inflation to be above the RBNZ target for almost the next two years,” said Ben Udy, Australia & New Zealand economist at Capital Economics.

“We still expect the Bank to raise interest rates towards the end of next year.”

The NZ 10-year bond yield was down 4 basis points at 1.71%, although that largely reflected a decline in overnight US yields.

The yield on Australia’s 10-year bond fell 3 basis points to 1.69%, helped in part by the sale of A $ 14 billion ($ 10.70 billion) in new 2032 government bonds on Tuesday.

The offer attracted strong demand from foreign investors, who took over 51% of the issue. Japanese Asian-ex investors led the bid by taking 29.2% of bonds, while the UK bought nearly 10% and the US 6.6%.

Fund managers accounted for 36% of sales, while banks bought 32% and hedge funds 24.3%.

Australian data is upbeat as the Westpac-MI consumer sentiment index surged to an 11-year peak in April, defying concerns about the government’s vaccine rollout. It follows a strong business survey on Tuesday.

“Consumers are currently in the sweet spot. The labor market is strong, savings accumulation is increasing and it appears that households are resilient to slow vaccine rollouts, “said CBA economist Belinda Allen.

“Both consumers and businesses are optimistic about the economic outlook and this bodes well for spending, hiring and investing.” ($ 1 = 1.3086 Australian dollars) (Edited by Rashmi Aich)

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UPDATE 2-New Zealand c. Banks remain on hold to keep the economy on a recovery path | Instant News


* RBNZ official cash rate is at 0.25%, as expected

* QE, funding for loans is maintained

* RBNZ says impact of new housing rules to watch (Adds details, analyst comments)

WELLINGTON, April 14 (Reuters) – New Zealand’s central bank left all current policy settings unchanged on Wednesday, saying monetary stimulus should continue to ensure inflation and employment targets are met.

The Reserve Bank of New Zealand (RBNZ) also said it would take time to observe the impact of the new housing market measures and the gradual revival of tourism on its economic recovery.

It keeps the official cash interest rate (OCR) at a record low of 0.25%, while also continuing the NZ $ 100 billion ($ 70.55 billion) quantitative easing tool and the Funding for Lending Program (FLP), both introduced last year to support a market hit by the COVID-19 pandemic.

“There is no reason for the RBNZ today to deviate from the ‘wait and see’ and ‘least regrettable’ strategy, or to sway the market price for an OCR hike, with markets on-board with the RBNZ message that tightening remains. prospects are distant, “said Sharon Zollner, chief economist at ANZ.

The central bank cut its cash rate by 75 basis points in March last year and pledged not to change for 12 months, while also introducing quantitative easing to support the economy. A Reuters poll expects the RBNZ to keep interest rates on hold and keep other tools of easing unchanged.

The RBNZ said inflation will surge in the near future, even exceeding the 2% target midpoint due to supply chain disruptions and rising oil prices, but this is temporary.

It reiterates that the prospect remains “very uncertain” and that meeting its targets will take a lot of time and patience.

“The committee agrees that medium-term inflation and employment will likely remain below its delivery target in the absence of a prolonged monetary stimulus,” said RBNZ.

HOUSING FOCUS

Business sentiment has faded in recent months despite a tremendous rebound in economic activity following the COVID-19 lockdown, and the economy contracting in the last quarter of 2020.

But these losses are offset by improving global prospects, and the return of Australian tourists to New Zealand next week via the COVID-19 ‘travel bubble’ arrangement.

The government, under pressure to cool the hot housing market, also introduced a series of measures in March that saddled investors with new taxes.

The RBNZ committee said housing measures are likely to dampen price growth but the extent of their influence will take time to observe.

It is recognized that stimulating monetary policy played a role in lifting house prices, along with other factors.

The government last year tasked the central bank with considering the impact of its monetary and financial policy decisions on housing prices, a move to help calm heating markets.

$ 1 = 1.4174 New Zealand dollars Edited by Jacqueline Wong

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UPDATE 1-German investor morale fell in April on lockdown fears, said ZEW | Instant News


(Adding analyst, context)

BERLIN, April 13 (Reuters) – Investor sentiment in Germany fell unexpectedly in April, the ZEW economic research institute said on Tuesday, citing growing concerns that private consumption could be depressed as Europe’s biggest economy got closer to extending lockdown measures.

ZEW said the investor’s economic sentiment survey fell to 70.7 points, the first drop since November 2020, from 76.6 the previous month. A Reuters poll forecasted the increase to be 79.0.

“Financial market experts are somewhat less euphoric than the previous month,” said ZEW President Achim Wambach in a statement. “The ZEW economic sentiment indicator, however, is still at a very high level and the current situation is considered much more positive than in March.”

Germany tightened lockdown measures in December to fight a third wave of coronavirus infections and the economy is expected to shrink in the first three months of this year.

Hopes for a return to growth in the second quarter have been tempered by expectations that restrictive measures will be extended beyond mid-April to stop an exponential rise in infections.

“The ZEW indicator is preparing us for another delay of the anticipated economic recovery,” said Thomas Gitzel, chief economist at VP Bank Group. “The limitation on gross domestic product growth in the second quarter is too high. The ZEW headline tells us that the bar must be lowered. “

Economists earlier this year predicted German growth of 3% based on expectations of a slow return to normal economic activity.

The ZEW gauge for current conditions rose to -48.8 points from -61.0 the previous month, confirming an assessment that the German economy remains in relatively good shape as increasing demand for goods from China and the United States keeps factories humming.

“Concerns about a tighter lockdown have led to lower expectations for private consumption,” said Wambach. However, the export prospects are better than the previous month. (Written by Joseph Nasr; editing by Maria Sheahan, Larry King)

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Brazilian meat packers have stopped production because beef prices have soared, domestic demand has shrunk | Instant News


SAO PAULO, April 12 (Reuters) – Brazilian beef packers have halted production at certain locations, as rising costs that cannot be passed on to consumer prices have squeezed margins, industry sources and representatives told Reuters.

Several small, medium and large production facilities have experienced outages or remain unemployed as they match supply to demand, said Paulo Mustefaga, president of the Abrafigo trading group, without providing additional details.

“The price of cattle has increased by about 60% over the year and the industry has been able to pass 40% of the cost well,” said Mustefaga. “This sector is having difficulty making ends meet.”

The 15-kilogram Arroba, Brazil’s benchmark for cattle prices, hit a historic high of 320 reais ($ 55.95) in recent days, driven by low animal supplies and heating demand for Brazilian beef exports, especially from China.

Mustefaga said another factor forcing companies to cut back on slaughter is the decline in the purchasing power of Brazilian families, as the coronavirus pandemic is slowing down Brazil’s already sluggish economic activity.

Brazil’s second-largest meat processor Marfrig, which owns National Beef in the United States, confirmed to Reuters it was sending employees on leave at a unit in the city of Alegrete for 30 days. The slaughtering there resumed on April 1.

The company also said it was temporarily suspending a plant in Rondonia state.

Minerva Foods, South America’s biggest beef exporter, suspended the Mato Grosso state facility and has not set a time to return, sources close to the company said on condition of anonymity.

Last month, Minerva shut down a factory in the state of Sao Paulo for 20 days, but production has now resumed.

Minerva declined to comment. ($ 1 = 5,7193 reais) (Reporting by Nayara Figueiredo Written by Ana Mano Editing by Marguerita Choy)

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