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☆ Morning Bid: Volatility stirs
▼ + stars: | 2023-02-10 | by ( ) www.reuters.com time to read: +5 min

World markets end a rough week of confusing and competing narratives in distinctly edgy form, with peculiarly subdued volatility gauges flickering back to life. Both 10 and 30-year yields hit their highest levels in over a month early on Friday. Job shedding in the digital sector continued, with Yahoo's plans to lay off more than 20% of its total workforce. That said, the year-on-year oil price trend continues to be negative, as it's been all year and base effects from last year's price spike around the Ukraine invasion will only deepen that and weigh on headline inflation further. Goldman Sachs lowered its oil price forecasts for this year and next, cutting its Brent 2023 price forecast by $6 to $92 per barrel - still above current levels around $86.

Last week, Bailey signalled the tide was turning on inflation, even if it was too soon to declare victory. We have got the largest upside skew in our forecasts that we have ever had on inflation," Bailey said. Haskel aligned himself with Catherine Mann who also sees big upside risks to the BoE's price forecasts. By contrast, Tenreyro said the full force of the BoE's rate hikes over the last year had yet to be felt, with economic momentum already fading. "It's crucial to see it through, that we do enough to address potential upside risks to inflation," he said.

☆ Bank of England's Bailey speaks to lawmakers after hint of rate hike pause
▼ + stars: | 2023-02-09 | by ( ) www.reuters.com time to read: +1 min

Below are quotes from Bailey and his colleagues in a question-and-answer session with parliament's Treasury Committee. BAILEY ON PERSISTENCE OF INFLATION"We are concerned about persistence (of inflation) and that's why, frankly, we raised interest rates this time... BAILEY ON PAY DEMANDS"What I would urge is that - particularly going forwards because we think inflation is going to fall very rapidly - that is taken into account." CHIEF ECONOMIST HUW PILL ON POLICY TIGHTENING"It's crucial to see it through, that we do enough to address potential upside risks to inflation." Reporting by William Schomberg, Suban Abdulla, and Sarah Young; editing by William JamesOur Standards: The Thomson Reuters Trust Principles.

☆ Morning Bid: Market to ChatGPT: what's Powell gotta say?
▼ + stars: | 2023-02-07 | by ( ) www.reuters.com time to read: +2 min

[1/2] ChatGPT logo and rising stock graph are seen in this illustration taken, February 3, 2023. Google owner Alphabet (GOOGL.O) unveiled a rival to super popular ChatGPT, saying it will launch a chatbot service named 'Bard'. Asian shares held their ground while the rally in the U.S. dollar took a breather on Tuesday. Reuters GraphicsMeanwhile, a deadly earthquake killed more than 3,700 people across a swathe of Turkey and northwest Syria, sending Turkey's lira to a record low. Before Powell takes centre stage and hogs the limelight, Bank of England's Huw Pill is also due to speak and his comments on monetary policy will likely move markets.

☆ Bank of England's Mann doubles down on backing for rate hikes
▼ + stars: | 2023-02-06 | by ( Gergely Szakacs | ) www.reuters.com time to read: +2 min

After hiking interest rates to 4% last week, the BoE's Monetary Policy Committee (MPC) signalled it was close to pausing a run of increases which began in December 2021. Mann, consistently the most hawkish member of the MPC, said the risk of under-tightening policy far outweighed the alternative. "In my view, a tighten-stop-tighten-loosen policy boogie looks too much like fine-tuning to be good monetary policy. "From a risk-management point of view, monetary policy has to lean against these upside biases since wage and price inflation are still so high," she said. At the other end of the MPC spectrum, Dhingra and Tenreyro say over-tightening risked sending Britain's economy into an unnecessarily severe downturn, with the full force of the BoE's rate hikes yet to feed through.

☆ BoE's Pill says important not to raise interest rates too high
▼ + stars: | 2023-02-03 | by ( ) www.reuters.com time to read: +1 min

LONDON, Feb 3 (Reuters) - Bank of England Chief Economist Huw Pill said on Friday it was important not to raise borrowing costs too high, a day after the British central bank signalled it was close to pausing a run of interest rate hikes which began in December 2021. "We have to recognise that we have done a lot with monetary policy already," Pill told Times Radio. On Thursday, the BoE raised interest rates to 4%, their highest since 2008, but it dropped language it previously used about its readiness to act "forcefully" if needed to contain inflation pressures. "Interest rates have risen by almost 400 basis points over ... little more than a year and, given the lags in the transmission of monetary policy, there's quite a lot of the effects of those raises in interest rates still to come through," Pill said. While the MPC was determined to "see the job through," Pill also said: "It's also important that we enguard against the possibility of doing too much."

☆ Morning bid: The morning after the night before
▼ + stars: | 2023-02-03 | by ( ) www.reuters.com time to read: +2 min

Dour fourth-quarter results from Apple (AAPL.O), Google-parent Alphabet (GOOGL.O) and Amazon (AMZN.O) are likely to cast a shadow on the markets on Friday before the crucial non-farms payroll data is released later in the day. Analysts expect 185,000 jobs were added last month and the report will likely paint a clearer picture of the labour market in the United States. The meltdown in share prices have stoked fears of wider impact on the Indian equities. A bright spot for the market was a private sector survey that showed China's services activity in January expanded for the first time in five months, sending business confidence to near 12-year highs. Even amidst the dire earnings reports from U.S. bellwethers there was a hint of hope that consumer spending was beginning to rebound in China.

☆ BoE set to lift rates to 14-year high, might hint at next moves
▼ + stars: | 2023-02-02 | by ( William Schomberg | ) www.reuters.com time to read: +4 min

The European Central Bank looks set to raise rates by a half a percentage point on Thursday to 2.5% and the main question for investors is how much more tightening it will signal. LOWER RATES PEAKAs of Wednesday, investors were pricing a roughly two-in-three chance that BoE rates will peak at 4.5% by June, with the possibility of an earlier halt at 4.25%. The BoE's inflation forecasts are also likely to change with recent sharp falls in international gas prices and a rise in the value of sterling lowering inflation later this year. The BoE is also due to update its estimate of the rate of unemployment that does not push up inflation. A rise in the non-accelerating inflation rate of unemployment would represent a lower speed limit on Britain's already slow economy.

Jan 11 (Reuters) - A look at the day ahead in Asian markets from Jamie McGeever. Another downside surprise, however, and Asian markets could open with an added spring in their step on Wednesday. chartThe scope of inflation data this week is broad. U.S. and other central bankers insist they cannot let up in the fight against rising prices, despite growing evidence inflation has peaked. The Aussie dollar hit a four-month high of $0.6950 on Monday and unsurprisingly eased back on Tuesday ahead of the inflation figures.

☆ Boe's Pill: Not ready to say world has shifted to persistently higher inflation
▼ + stars: | 2023-01-10 | by ( Michael S. Derby | ) www.reuters.com time to read: 1 min

NEW YORK, Jan 9 (Reuters) - Bank of England Chief Economist Huw Pill said on Monday that it's too soon to say that the current economic environment has shifted to one where inflation is persistently higher than it has been in recent decades. It is "going too far" to argue inflation has become unanchored and central banks have lost the ability to bring price pressures back down, Pill said in comments before a gathering held by the Money Marketeers of New York. Reporting by Michael S. Derby; Editing by Sandra MalerOur Standards: The Thomson Reuters Trust Principles.

☆ UK jobs market softens again in December - REC
▼ + stars: | 2023-01-10 | by ( ) www.reuters.com time to read: +2 min

The survey, watched closely by the BoE, also showed an easing in wage pressures. "A slowdown in permanent placements is not unusual in December, but this one comes as part of a wider softening trend in the permanent market," said REC chief executive Neil Carberry. "Recruiters tell us that this was enhanced by firms pushing hiring activity back into January in the face of high inflation and economic uncertainty." Britain's economy looks set to contract in 2023, according to most economists polled by Reuters, and business surveys show cooling price pressures. The REC survey showed placements of permanent staff contracted at the fastest rate since January 2021.

☆ Investors wait to hear from Fed Chair Powell at central banking forum
▼ + stars: | 2023-01-10 | by ( Nicole Goodkind | ) edition.cnn.com time to read: +3 min

Powell is set to participate in a panel discussion on central bank independence at an event hosted by Sweden’s central bank, the Sveriges Riksbank. It will also be attended by Bank of England Governor Andrew Bailey and European Central Bank member Isabel Schnabel, among others. That has enabled the Fed to start easing back on the size of its historically high rate hikes meant to cool the economy and fight rising prices. These three central banks are fighting in different conditions, but they share a similar battle strategy: Keep tightening. Thursday’s Consumer Price Index for December — which will be the new year’s first check on inflation — will also provide helpful clues to investors about whether US price hikes are sufficiently cooling.

☆ Morning Bid: Seeing through another shock
▼ + stars: | 2023-01-09 | by ( ) www.reuters.com time to read: +4 min

Brazil's weekend political shock reminds world markets of fragile geopolitics, but investors more broadly appear happier to stick with a new year narrative of recovery from a dire 2022. Days after his inauguration, leftist President Luiz Inacio Lula da Silva announced a federal security intervention in Brasilia until Jan. 31. Fed chair Jerome Powell speaks on Tuesday but the big data release of this week is Thursday's consumer price report. The gap between positive euro zone economic surprise indices and negative U.S. equivalents is now at its widest since June. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ Morning Bid: Goodbye to all that
▼ + stars: | 2023-01-09 | by ( ) www.reuters.com time to read: +2 min

A look at the day ahead in European and global markets from Tom Westbrook:After three years, travellers are streaming into China by air, land and sea. the official newspaper of the Chinese Communist Party, the People's Daily, wrote on Sunday. The yuan punched through its 200-day moving average to its highest since August, and the dollar was in retreat wherever Chinese tourists are expected. The twin hopes, then, of a gentler Fed and reviving China are holding recession fears at bay. In emerging markets, focus is on the open of trade in the Brazilian real after hundreds of supporters of far-right former President Jair Bolsonaro were arrested during an invasion of the country's Congress, presidential palace and Supreme Court.

☆ BoE's Pill sees risk of persistent inflation, even if gas prices fall
▼ + stars: | 2023-01-09 | by ( David Milliken | ) www.reuters.com time to read: +4 min

Markets see BoE rates peaking at 4.5% in June, while economists polled by Reuters in December predicted a peak of 4.25% in the second quarter of 2023. The BoE also forecast headline inflation will fall this year as natural gas prices level off. Natural gas prices in Britain , which spiked in response to Russia's invasion of Ukraine last February, have retreated to around the same level as a year ago, but are several times higher than in early 2021. Pill said that even if natural gas prices eased further, that would not guarantee that underlying price pressures would fall enough for inflation to return to its 2% target. If businesses and workers did not pursue moderate price and wage strategies, Pill said the BoE would have to keep raising rates.

By contrast, the median forecast for a similar poll on the U.S. Federal Reserve is exactly where futures currently price the Fed's terminal rate next year - 5.0%. Any reversion of terminal rate pricing to consensus or below could see the pound wobble again. "That said, we have been stressing downside risks to our terminal rate projection, given the constant dovish messaging from the MPC. BoE poll question on Terminal Rate Risks? Central Bank Rate Hike CampaignSterling volatilityThe opinions expressed here are those of the author, a columnist for Reuters.

Commercial banks are paid interest on the reserves by the BoE at whatever is the BoE's current interest rate - just 0.1% a year ago, but 3% now and likely to rise further. But now the BoE makes losses because the interest paid on reserves exceeds income from its QE bond holdings. Bailey said the current structure of paying interest fully on all reserves was the simplest way for the BoE to ensure its interest rate changes are transmitted through the financial system. He disagreed with descriptions that this was free money for banks, since they had their own funding costs to meet that also rose with central bank interest rates. Another former BoE rate-setter, Gertjan Vlieghe, on Thursday said it would be a "disaster" to stop paying interest on reserves, even partially - akin to a default on debt.

☆ Morning Bid: COVID vs RRR
▼ + stars: | 2022-11-24 | by ( Stella Qiu | ) www.reuters.com time to read: +2 min

SYDNEY, Nov 24 (Reuters) - A look at the day ahead in European and global markets from Stella Qiu:Another central bank pivots. This has aided the risk-on mood in the market, with Asian shares mostly advancing and U.S. dollar broadly weaker. The minutes of the Fed's November policy meeting showed a "substantial majority" of policymakers reckon it will "likely soon be appropriate" to slow the pace of rate hikes. China's COVID infections hit a record high, with Beijing, which has the strictest rules, failing to contain the spreading virus. "In our view, ending zero COVID as soon as possible is the key to raising credit demand and bolstering growth."

LONDON, Nov 24 (Reuters) - The Bank of England will not accept interference with the system of paying interest to banks from reserves issued by the central bank, BoE Chief Economist Huw Pill said on Thursday, pushing back against talk that change is needed. Some former BoE officials have said the central bank should alter its system of paying interest to banks on its 950 billion pounds ($1.15 trillion) of reserves, the vast majority of which the BoE issued to finance its quantitative easing programme. Pill's comments are likely to be interpreted as a warning to the government, which ultimately decides how interest on reserves are paid. Commercial banks are paid interest on the reserves by the BoE at whatever is the BoE's current interest rate - just 0.1% a year ago, but 3% now and likely to rise further. However, another former BoE rate-setter, Gertjan Vlieghe, said on Thursday it would be a "disaster" to stop paying interest on reserves, even partially - citing recent concerns about Britain's institutional credibility.

☆ Sterling ticks up, economic activity slows by less than expected
▼ + stars: | 2022-11-23 | by ( ) www.reuters.com time to read: +2 min

LONDON, Nov. 23 (Reuters) - Sterling ticked up on Wednesday, rising for a second day against a faltering U.S. dollar after preliminary British economic activity data beat expectations, though it still showed contraction was underway. Flash purchasing manager index (PMI) data on Wednesday showed British economic activity sticking near 21-month lows, adding to signs of recession as orders sank and employment growth slowed. Despite the latest PMI readings remaining below 50 - the threshold for contraction - the data was slightly better than economists polled by Reuters had expected, leading to a slightly firmer pound. The Organisation for Economic Cooperation and Development said on Tuesday that Britain's economy was set to lag major peers in 2023. In an October poll, the rate was expected to end this year at 3.75%.

☆ Morning Bid: On the fence
▼ + stars: | 2022-11-23 | by ( Steve Scherer | David Ljunggren | ) www.reuters.com time to read: +2 min

The market has been looking, almost clamouring, for signs of slowdown in the pace of interest rate hikes. And so, the dollar remains on guard, Asian equities mostly tracked Wall Street gains and gold stayed flat . The tentativeness among investors is in stark contrast with the soccer world, which remains in shock after Saudi Arabia came from behind to beat Lionel Messi's Argentina in the World Cup. The central bank warned the economy might have to spend an entire year in recession to bring inflation under control. The first bankruptcy hearing for FTX showed that the collapsed crypto exchange has been the subject of cyberattacks and had "substantial" assets missing.

☆ Morning Bid: Bear Hunt
▼ + stars: | 2022-11-17 | by ( ) www.reuters.com time to read: +5 min

Long-term sovereign bond yields have been falling sharply all week in advance of finance minister Jeremy Hunt's new budget, dragged down largely by U.S. disinflation hopes. UK 10- and 30-year gilt yields outperformed, however, dropping to their lowest since early September before backing up slightly on Thursday. U.S. housing starts numbers out later will give another glimpse at the state of the ailing property sector. Reverberations continued around the world from this month's latest implosion in the crypto universe and the failure of the FTX exchange. Major crypto player Genesis Global Capital suspended customer redemptions in its lending business on Wednesday, citing the FTX collapse.

☆ Morning Bid: Markets primed for gridlock
▼ + stars: | 2022-11-08 | by ( ) www.reuters.com time to read: +2 min

A look at the day ahead in European and global markets from Anshuman DagaGrowing expectations of a split government after the U.S. midterm elections are supporting U.S. shares, while Asian markets stubbornly cling onto hopes that China will relax its strict pandemic curbs. Banking stocks could be in focus in Europe on Tuesday after the European Central Bank's top supervisor Andrea Enria said the ECB is carefully scrutinising euro zone banks' payout plans as the outlook for the 19-nation currency bloc's economy weakens. For global markets, the U.S. midterm elections will be the big event to monitor. And analysts say Republicans could also pick up the one seat they need to win control of the Senate. Asian shares ticked higher on Tuesday, encouraged by gains on Wall Street and hopes of China's eventual economic reopening.

☆ BoE's Pill sees no victory over inflation yet but recession coming
▼ + stars: | 2022-11-08 | by ( ) www.reuters.com time to read: +1 min

"I think we cannot declare victory against second-round effects, but we are entering a recession," Huw Pill said at a conference organised by the bank UBS on Tuesday. But the central bank also told investors that they were pricing in too many interest rate increases in the future, a message that Pill said was an attempt to give a more realistic view of where Bank Rate was heading. "We're not meant to be inflation nutters," Pill said. "We are meant to sort of manage this trade-off in a way that avoids unnecessary, counterproductive maybe, disruptions to the real economy." Pill said he was sceptical that front-loading interest rate increases could bring about an "immaculate disinflation" with no real-world consequences, addressing criticism that the BoE had been too slow to raise borrowing costs.

☆ We're not 'inflation nutters,' top Bank of England economist says
▼ + stars: | 2022-11-08 | by ( Elliot Smith | ) www.cnbc.com time to read: +1 min

The Bank of England accepted a record amount of gilts at a reverse auction on Wednesday. LONDON — Bank of England policymakers are not "inflation nutters" but tightening of monetary policy is necessary to prevent surging prices becoming entrenched in the economy, the central bank's Chief Economist Huw Pill said Tuesday. "We're not meant to be inflation nutters. We are meant to sort of manage this trade-off in a way that avoids unnecessary, counterproductive maybe, disruptions to the real economy," Pill said at a conference organized by Swiss bank UBS . The Bank of England has come under criticism for being too slow off the mark in its efforts to rein in sky-high inflation.

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