Halister News

(Bloomberg) -- UST 2Y yield “should consolidate” around 90bp-100bp and could fall as low as 65bp “in a risk-off environment,” as Fed seems to have reverted to a “talk hawkish and act cautious” approach, HSBC strategist Lawrence Dyer says in March 16 note.

• 10Y yield should consolidate in 1.90%-2.00% range with a near-term target of 1.60%-1.70%
• Fed “has a strong domestic focus,” meaning “it can underestimate the magnitude of the global headwinds and their impact on U.S. rate outlook”
• Low rates in Germany and Japan should keep pressure on U.S. rates, while dovish long-term outlook for ECB and BOJ “are likely to influence investors’ views on the Fed outlook”

Economic Release Details: {SARPRT Index ECOD} --ALASTAIR REED

Information from person familiar with the matter, who is not authorized to speak publicly and asked not to be identified. --LISA LORAY

(Bloomberg) -- Law should be changed to link tax evasion with money laundering, limit use of shell cos. as investment vehicles, La Diaria reports, citing Carlos Diaz, head of financial crimes agency SLLA.

• SLLA collaborating with lawmakers, judges, govt to draft legislation that would tighten anti-laundering rules

(Bloomberg) -- The BOE voted unanimously to leave rates unchanged at 0.5% and the MPC said they were more likely than not to lift the rate in the next three years. HOW SPLIT WAS THE VOTE?

• There was a 9-0 vote to keep rates and the stock of purchased assets unchanged
• NOTE: Analysts surveyed by Bloomberg had expected an 9-0 vote to leave rates unchanged

WHAT THE MINUTES SAY ABOUT THE DIRECTION OF THE NEXT RATE MOVE?

• More likely than not Bank Rate will need to increase over the forecast period to ensure inflation returns to the target in a sustainable fashion
• There is no mention of any discussion about a rate cut

WHAT DID THE BANK SAY ABOUT ASSET PRICES AND INFLATION?

• Asset prices have generally been supportive for U.K. growth and inflation with the prices of risky assets rebounding
• Oil prices have risen, U.K. short-term interest rates and sterling have fallen relative to the conditioning assumptions that underlay the projections in the February Inflation Report

WHAT DID THE MPC SAY ABOUT BREXIT?

• Uncertainty surrounding the forthcoming referendum on U.K. membership of the EU is likely to have been a significant contributor to sterling’s fall and may also delay some spending decisions and depress growth of aggregate demand near term
• There is a range of views among MPC members about the balance of risks to inflation

ANY FURTHER INSIGHT ON WHY WAGE GROWTH REMAINS MUTED AND THE OUTLOOK?

• The return to higher rates of inflation should in time support wage gains
  • Inflation expectations remain well anchored, although the BOE remains watchful for signs that low inflation is having more persistent second-round effects on wages

(Bloomberg) -- The Fed’s dovish tone comes even amid a rise in core U.S. CPI and a surge in the central bank’s own preferred measure of inflation, the core PCE deflator, Societe Generale analyst Albert Edwards writes in client note.

• While some may say the surge is a sign the Fed is way behind the tightening curve, Edwards says it confirms the end of the third longest U.S. economic cycle
• A downturn in corporate margins explains the pick-up in core inflation
• In the run up to past two U.S. recessions, unit labour costs rose above output prices as is the case again now

(Bloomberg) -- Initial jobless claims seen at 268k in week ended March 12 vs 259k prior wk (forecast range 255k to 280k)

• Philadelphia Fed Business Outlook Survey seen at -1.5 in March vs -2.8 in Feb. (forecast range -6 to +2); diffusion index represents percentage of respondents indicating increase minus percentage indicating decline
• Current account balance seen at -$118b in 4Q vs -$124.1b in 3Q (forecast range -$110b to -$124.5b); measure of international transactions, including trade in goods and services, income and financial transfers