Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
After a late-February wobble, the markets are starting March with a spring in their steps.
Anxiety over rising government bond yields, which gripped investors last week, have faded a little as bond prices recover this morning, and traders anticipate an economic recovery this year.
The yield (or interest rates) on US Treasury bills is dipping back from the highs seen last week. It’s down to around 1.4% in early trading, having spiked to one-year highs over 1.5% last week.
This bond market recovery is good for equities – Japan’s Nikkei has rebounded, jumping 697 points or 2.4% to 29,663, with Hong Kong’s Hang Seng up 1.5%.
Britain’s FTSE 100 (which suffered its biggest plunge since October on Friday), is due for a positive start too — up around 0.8% in pre-market.
Last week’s sell-off in government bonds jolted the markets. Investors faced the possibility that rising inflation could force central bankers to raise interest rates (something they’re really not keen to do).
Jim Reid of Deutsche Bank predicts the central bankers will push back this week, telling clients:
There is little doubt in my mind that central banks will eventually lean quite hard against a sustained rise in yields. They simply can’t afford to see it happen with debt so high.
So far though, Fed officials have been largely relaxed over the recent moves, suggesting that it reflects more positive economic growth. But as it all happened so fast last week they will have had a chance to regroup and align their message for this week.
There’s also relief today that the US House of Representatives has passed Joe Biden’s $1.9tn coronavirus aid bill. That should send more emergency financial aid to households, small businesses and state and local governments, once the package has been approved by the Senate too.
Plus, America’s Food and Drug Administration (FDA) has authorized Johnson & Johnson’s (J&J) vaccine for emergency use – which should help the Biden White House tackle the pandemic.
A flurry of manufacturing surveys from across the world are being released today, which will show how UK, European and US factories fared last month.
Plus we get the latest estimate of inflation (the issue of the moment!) in Germany, and new UK housing data — just as chancellor Rishi Sunak prepares to announces (we think) a mortgage guarantee scheme to help buyers with small deposits.
- 9am GMT: Eurozone manufacturing PMI survey for February
- 9.30am GMT: UK manufacturing PMI survey for February
- 9.30am GMT: UK mortgage approvals and consumer credit data for January
- 1pm GMT: German inflation rate in February
- 3pm GMT: US manufacturing PMI survey for February