January 29, 2024
United States:
US Treasury Seen Boosting Long-Term Debt Sales One Last Time
Wall Street is widely expecting the US Treasury to announce a final increase to its sales of long-term debt this week, after a steady ramp up in supply that’s sometimes tested buyers’ appetites for funding a widening budget deficit.
The Treasury Department is expected on Wednesday to follow through on its November guidance of a third round of increases in its so-called quarterly refunding auctions of notes and bonds. That would put the total at $121 billion, not far from the record sizes during the Covid crisis.
Europe:
Euro Falls, Bonds Gain as Traders Pin Hopes on Early ECB Cut
European government bonds rallied while the euro extended its biggest monthly loss since September amid growing speculation the European Central Bank will cut interest rates sooner rather than later.
ECB official Francois Villeroy de Galhau signaled over the weekend that policy makers could lower borrowing costs at any moment this year and all options are open at upcoming meetings. The market responded by firming wagers on a quarter-point decrease as early as April, which is now fully priced. Just before last week’s monetary policy meeting, the odds of that were 60%.
Asia:
China’s Deflation Pressures Seen Persisting Through Mid-2024
China’s deflation pressures are likely to continue for at least another six months on weak demand and as the property crisis continues to sap confidence within the economy.
A measure of economy-wide prices called the gross domestic product deflator is expected to decline for at least two more quarters, according to 12 of 19 economists in a new Bloomberg survey. That gauge — which measures the difference between nominal and real GDP growth — has already fallen for the last three quarters, and a continued drop through June would mark the longest streak since 1999.
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