Week 6 2017

Week 6 2017

06 February – 10 February

 

06 February

 

The US bond market is succumbing to the advances of passive investing, with exchange traded funds and index-trackers now controlling more than a fifth of the fixed-income market — and rising fast.

 

In mid 2016, the global economy embarked on a regime of reflation that has been dominating market behaviour ever since then. This has constituted a simultaneous rise in real output growth, along with a rebound in inflation as commodity prices have recovered from their 2014-15 slump.

 

Indonesia’s economy shrank 1.77 per cent in the fourth quarter. GDP contracted 1.77 per cent quarter-on-quarter in the three months ended December, dropping from 3.2 per cent growth in the September quarter and close to the median forecast from economists of minus 1.8 per cent.

 

Foreign investors trimmed their holdings of Chinese sovereign and quasi-sovereign bonds in January, according to new data, suggesting that concerns over rising interest rates and currency depreciation are cooling foreign demand for renminbi paper.

 

07 February

 

Jean Pierre Mustier, chief executive of UniCredit, has criss-crossed the world in the past two months seeking to cajole investors into buying €13bn in new shares — a major test of confidence not just for Italy’s largest bank but also the country’s teetering banking sector.

 

Mario Draghi has pushed back against the new US administration on issues ranging from financial regulation and protectionism to the valuation of the euro, underlying the scope for transatlantic discord as President Donald Trump’s team advances its America First agenda.

 

Reliance, the UK life insurer, is calling an end to 100 years of mutual ownership by transferring its business to an asset manager in the face of tougher regulation.

 

US and European stocks struggled for traction while the dollar gained ground against the euro as political and economic uncertainty on both sides of the Atlantic left financial markets trading with a mildly risk-averse tone.

 

08 February

 

The president of the Bundesbank has decried US accusations that Germany is a currency manipulator, highlighting the risk of a clash between Washington and Berlin over Donald Trump’s protectionist rhetoric.

 

A split between the EU’s eurozone members and the IMF over Greece’s bailout deepened on Tuesday as one of Europe’s most senior policymakers and the Athens finance minister criticised the fund for being too pessimistic about the country’s prospects.

 

Stock markets across Asia were lower after a flat session for Wall Street where a cautious mood still prevailed. Markets were rattled earlier this week, prompting a flight to haven assets like bonds, amid concerns about the political outlook in Europe and further details of US President Donald Trump’s economic policies.

 

Japan’s Kansai Paint has agreed to buy three east African paint companies to tap into one of the world’s fastest-growing regions as part of its global expansion.

 

09 February

 

Stock markets are generally firmer as investors absorb a flurry of company earnings reports. The dollar is regaining its footing, nudging gold down from recent highs, while sovereign bond markets are becalmed.

 

Some people didn’t appreciate Alphaville’s recent comparison of Greece’s economic performance since 2007 with that of the United States during the Great Depression, which implied the Greek government missed a trick by committing to remain a member of the euro area no matter the costs.

 

The Norwegian economy returned to growth at the end of the year after contracting in the third quarter, as recovery in the oil and gas industry helped it to recover faster than economists had forecast.

 

Tata Steel has signed a “definitive” agreement to sell its speciality business based in northern England for £100m to Liberty House, in a deal that could safeguard 1,700 jobs.

 

10 February

 

Credit du Nord, the French bank, has paid €500m to buy out Aviva’s stake in Antarius, a bancassurance joint venture owned by the two companies.

 

Mexico’s central bank increased its key lending rate on Thursday as expected by 50 basis points to 6.25 per cent after January inflation jumped to an 18-year high, fuelled by a sharp rise in gasoline prices.

 

Jittery Greek bond yields have slipped back from eight month highs this morning at the end of another big week for the state of the country’s stuttering bailout talks.

 

Opec countries drastically curbed their output in the first month of their new production agreement, in the clearest sign to date that the world’s biggest oil producers are committed to living up to the November pact to cut global supplies.