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March 3 – The UK government is cutting bond issuance to its lowest level in three years, reflecting an improved fiscal situation. The UK Debt Management Agency announced on Tuesday that it will sell £252.1 billion in bonds in the fiscal year beginning in April. While this figure is slightly higher than the £245 billion expected by banks in a survey, it is significantly lower than the £303.7 billion expected for the current fiscal year. Although the reduced supply is good news for bond investors, UK government bonds were still sold off this week due to inflation concerns fueled by the Middle East conflict, which could prevent the Bank of England from further cutting interest rates. Following the announcement, 10-year government bonds maintained their earlier decline, with the yield rising 15 basis points to 4.52%. This bond sale plan follows Chancellor Reeves economic statement. Although recent fiscal statements have triggered market turmoil, benchmark UK government bond yields fell to their lowest level since 2024 last week due to stronger fiscal conditions and expectations of interest rate cuts.Federal Reserve Governor Bowman: The Federal Reserve should review the effectiveness of its liquidity regulatory rules.Federal Reserve Governor Bowman: The liquidity framework does not adequately address bank stress.Federal Reserve Governor Bowman did not comment on monetary policy or the economic outlook in her prepared remarks for an event related to bank liquidity rules.March 3 - According to sources, Iraq has halted crude oil exports from its semi-autonomous Kurdish region to the Turkish port of Cheyhan. The sources indicated that producers took precautionary measures to reduce production due to the escalating conflict in the Middle East, resulting in the disruption of approximately 200,000 barrels of oil shipments per day. They noted that currently only 50,000 barrels of crude oil are being produced daily for local consumption. In previous periods of instability, energy infrastructure in Iraqs northern Kurdish region has been repeatedly targeted by attacks.

Despite the fact that Eurozone interest rates are anticipated to peak sooner, the EUR/GBP looks to have breached over 0.8630

Daniel Rogers

Dec 07, 2022 15:12

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The EUR/GBP pair has had a stronger recovery from 0.8580 during the Asian session, approaching the pivotal 0.8630 level. Despite the European Central Bank (ECB) being close to reaching an interest rate high, there has been strong demand for Euro bulls. Thus, the monetary policy meeting scheduled for next week will be of utmost significance.

 

The cross is attempting to break strongly above the significant barrier of 0.8630 for the fourth time this week. The hawkish remarks made by ECB policymakers are holding back the euro bulls.

 

"There will be another rate hike," said Constantinos Herodotou, governor of the Central Bank of Cyprus, "but we are very near to neutral." The European Central Bank's chief economist, Phillip Lane, is unsure as to whether the inflation peak has already occurred or will take place in 2019. He stated that although "much has already been done," he does not rule out more rate increases.

 

Investors are currently looking forward to Christine Lagarde's speech, which will be revealed on Thursday. The ECB President is likely to lower her inflation projection in her future statement in light of the poor retail sales numbers.

 

In contrast to expectations for a 1.7% loss, this week's Eurozone retail sales numbers showed a 1.8% decline. Aside from that, annual economic data contraction came in at 2.7% as opposed to the 2.6% consensus expectation. A decline in household demand demonstrates the effectiveness of the European Central Bank's (ECB) policy tightening initiatives. To reach their sales targets, firms could feel pressured to lower the prices of their products and services.

 

The United Kingdom's deteriorating food crisis, brought on by growing costs and a labor shortfall, has had an impact on the Pound Sterling. According to Minette Batters, president of the National Farmers Union, "the government and the entire supply chain must act swiftly." The Financial Times stated that "tomorrow might be too late." The economy already faces rising food inflation, and the issue with the supply of food will make matters worse.


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