Euro-area inflation comes in well below expectations, China cuts its reserve ratio requirement, and the G-20 meeting underwhelms. Here are some of the things that people in markets are talking about today.
Consumer prices in the euro-area declined to minus 0.2 percent in February, with core inflation falling to 0.7 percent from 1 percent the previous month, according to the flash estimate published by the European statistics agency, Eurostat, this morning. The median estimate from economists surveyed by Bloomberg was for headline inflation to remain unchanged, so today's disappointing number will serve to increase pressure on the ECB to ease further at its policy meeting next week. The euro currency dropped following the release while German sovereign debt yields fell once again.
China cuts RRR
Last Friday the People's Bank of China signalled that it had further room to ease monetary policy, a signal it followed through on this morning when it cut the amount of money the nation's lenders must lock away in required reserves by 0.5 percentage points. Chinese stock-index futures gained while the yuan weakened following the announcement, which came after the market close in China.
The meeting of finance ministers and central bank governors of the Group of 20 major economies in Shanghai concluded on Saturday with a call for governments to do more, and central banks to do less. The communique from the meeting is a disappointment to investors who had been hoping for more concrete action on the global economy.
Ireland, Iran, U.S. elections
While counting is still incomplete, Ireland's general election on Friday has produced no clear winner, with the coalition that had governed for the past five years falling well short of a majority. Talks on forming a new administration, including the possibility of a grand coalition between the two largest center-right parties who had taken opposing sides in Ireland's civil war almost a century ago, are set to begin ahead of the next parliament sitting on March 10. The bond market has reacted calmly to the result so far with the Irish 10-year bond virtually unchanged this morning. In Iran, progressive candidates made gains in the parliamentary elections, bringing an end to the over-whelming majority previously held by hard-liners. In the U.S., ahead of 'Super Tuesday' voting, Texas Senator Ted Cruz has warned that Donald Trump may all but lock up the Republican presidential nomination if he wins big in the 11 primary or caucus contests slated for tomorrow.
Oil bulls arise
Bullish bets on oil increased to the highest level since November as hedge funds and other speculators increased their net-long position in West Texas Intermediate futures and options by 14 percent in the week ended February 23. Pain for producers continues, with Saudi Arabian foreign assets approaching a four-year low following another drop in January, while this morning shares in Genel Energy Plc, a U.K. oil producer operating in Iraq’s Kurdish region fell by as much as 40 percent after the company reduced its reserves estimate for its largest field by almost half. WTI was trading 0.5 percent lower at $32.61 per barrel at 11:30 a.m. London time.
What we've been reading
This is what's caught our eye over the last 24 hours.
- The world's most popular stock picks are sinking.
- It's getting harder for currency traders to make money.
- Gold becomes the biggest winner of 2016.
- Citi says there's been a worrisome change in the new corporate debt market.
- Valeant CEO returns from leave, company withdraws guidance.
- Asset manager with $40 billion can ignore 'financial armageddon.'
- Chinese tycoon loses 37 million followers after faulting Xi.
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