Bond Market Storm Builds Behind Wall Street’s Serene Yield Call
For all the talk about the end of the bull market in bonds, the consensus on Wall Street for the year ahead is for the smallest projected change in yields since 2008. The benchmark 10-year Treasury yield will rise to 2.75 percent at year-end, less than a third of a percentage point above where it began 2017, and compared with about 2.35 percent Tuesday morning in New York, according to the median estimate of 62 strategists and economists surveyed by Bloomberg. Yields moved that much in just two days after the U.K. vote in June to leave the European Union. The tepid forecast masks the tension that will define 2017 in the world’s biggest bond market — between those who expect the reflation trade, spurred by the policies of President-elect Donald Trump, to take hold, and those who argue that the U.S. economy has yet to escape its slow-growth stupor.
Britain will leave EU single market, May says
Britain will leave the EU’s single market when it exits the European Union, Prime Minister Theresa May said on Tuesday, putting an end to speculation that London might try to seek a "soft Brexit". In a long-awaited speech in which she sought to define the country’s future as a global player that aims to trade freely far beyond Europe, May said the final exit deal would be put to parliament for a vote. That promise helped revive the pound on currency markets. Sterling, which has traded at the lowest levels against the U.S. dollar for more than three decades, rose during May’s speech hitting a day high. May said she would seek an equal partnership with the EU but that she would not adopt models already used by other countries that have free trade agreements with the bloc. Her statement that Britain would leave the single market was by far the clearest indication she has ever given of her plans for the future, after months of criticism that she was not being sufficiently transparent.
Brazil to Revise Growth Figures After IMF Slashed Outlook
Brazil will revise its 2017 growth estimate after the International Monetary Fund more than halved its forecast to near-stagnation, Finance Minister Henrique Meirelles said in Davos. “We’re going to revise it in about two weeks,” Meirelles said in an interview with Bloomberg News Editor-in-Chief John Micklethwait. Growth for 2017 will be “a low number because of the very deep recession and the statistical carry over that brings the number down.” While Brazilian stocks have rallied about 20 percent since President Michel Temer took office last May and appointed Meirelles as his finance minister, a rebound in the real economy has been more elusive as unemployment continues to rise and private consumption stagnates. Highly regarded for his eight-year tenure as the head of the central bank in the previous decade, Meirelles lent credibility to Temer’s agenda of fiscal austerity and economic reforms, fueling hopes that Brazil would soon emerge from its worst recession on record.