The Bond Market Is Calling Yellen’s March Rate Hike Bluff
Bond traders are calling the Federal Reserve’s bluff. For weeks now, everyone from Janet Yellen to Fed newcomer Patrick Harker has been trying to jawbone investors into believing an interest-rate increase in March is on the table. That the meeting is “live.” Yet try as they might, the bond market seems unconvinced there’s much behind the tough talk. With less than three weeks to go, traders see slightly more than a one-in-three chance the central bank raises rates. That’s well short of the 50 percent minimum that has predicated every rate hike in the past quarter-century, according to data compiled by Bianco Research. Reasons for the skepticism are varied, but the one that stands out is the simple fact that Fed officials are running out of time to make their case. The February jobs report comes five days before Fed officials gather and inflation data will be released mere hours before their decision is announced.
Euro-Area Economic Confidence Climbs to Highest Since 2011
Euro-area economic confidence rose to the highest level in almost six years in a sign of continued momentum as the European Central Bank prepares to update its outlook for growth and inflation. An index of executive and consumer sentiment in the region increased to 108 in February from 107.9 the previous month, the European Commission in Brussels said Monday. That compares to a 108.1 median estimate in a Bloomberg survey of economists. The latest health check on the recovery follows a string of positive data suggesting the 19-nation bloc is coping with challenges in a potentially tumultuous year. So far, rising support for euro-skeptic parties ahead of national elections in a number of euro-area countries has done little to hurt growth, with a gauge for economic activity jumping to a near six-year high in February and unemployment on a downward path.
China Jan services trade deficit narrows to $20.9 bln
China’s trade deficit in services narrowed to $20.9 billion in January from $26.1 billion in December, the foreign exchange regulator said on Monday. January’s deficit was largely due to a $19.7 billion gulf in spending between foreign tourists and the Chinese, who splurge more abroad than foreign tourists in China, data from the State Administration of Foreign Exchange (SAFE) showed. China’s trade deficit in services widened to $260.1 billion last year, from $206.5 billion in 2015. (Reporting by Beijing Monitoring Desk; Editing by Sunil Nair)