Here is what you need to know.
Iran won’t join the oil production freeze.On Tuesday, Russia, Saudi Arabia, Qatar and Venezuela announced an agreement to freeze oil production in an effort to ease the oil glut. On Wednesday, Iran said it wouldn’t join the effort as its production just came back online. “Asking Iran to freeze its oil production level is illogical … when Iran was under sanctions, some countries raised their output and they caused the drop in oil prices,” said Iran’s OPEC envoy Mehdi Asali. According to Trading Economics, Iran’s oil production makes up about 23% of the country’s wealth. West Texas Intermediate crude oil is higher by 2.5% at $29.75 per barrel.
China is selling US Treasurys. China’s holdings of US Treasurys fell by $18.4 billion to $1.25 trillion in December, hitting a 10-month low. The news coincides with the recent drop in China’s reserves, which have seen a drawdown as Beijing looks to support its currency, the renminbi, through market intervention. China’s official FX reserves fell by $107.9 billion to $3.33 trillion in December, making for the biggest drop on record.
Japan’s overnight rate turned negative. According to Bank of Japan data obtained by Bloomberg, Japan’s unsecured overnight rate fell to -0.002%, hitting negative territory for the first time since 2004. The negative print comes just a day after the central bank began charging some lenders interest on their excess reserves. Interestingly, Japan’s 10-year yield fell below zero last week, but has since ticked back up to 4.5 basis points (0.045%).
The number of people claiming benefits in the UK hit a 40-year low. In January, only 760,000 people claimed jobless benefits in the UK, the lowest total since 1976. However, the drop by 14,800 claimants was unable to move the needle on the unemployment rate, which held at 5.1% versus expectations of a slip to 5%. The UK’s current employment rate is 74%, the highest since bookkeeping began in 1971. The British pound is little changed at 1.4310.
Hedge funds were buying Morgan Stanley in Q4. Reuters reports, Dan Loeb’s Third Point bought 3 million shares of Morgan Stanley in the fourth quarter while Carlson Capital purchased 2.2 million shares and Adage Capital added 1.6 million shares to its existing position. So far in 2016, the Morgan Stanley shares are down more than 27% as the firm attempts to turn around its struggling fixed income business. It’s unclear if the funds still own the positions as SEC filings only need to be made quarterly.
Fitch cut Anglo American to junk. Ratings agency Fitch cut Anglo American’s debt rating to junk, and slapped on a negative outlook as the miner looks to lighten its debt load by selling assets. Fitch lowered Anglo’s rating to BB+ from BBB- and said, “The negative outlook primarily reflects the high level of uncertainty regarding the ultimate success of the group’s restructuring plan.” Bloomberg notes, the move to junk follows a similar measure taken by Moody’s on February 15.
Volkswagen might have more problems. A Dutch foundation attempting to recover damages for Volkswagen shareholders says it has won the support of dozens of investors, since it was launched last week, according to Reuters. The Volkswagen Investor Settlement Foundation wants to “provide shareholders fair compensation for their losses,” spokesman Anatoli van der Krans said. The foundation is attempting to apply Dutch law to the settlement, and wants to make the agreement available to investors all over the world.
Global markets trade mixed. France’s CAC (+1.9%) paces the gains in Europe after Japan’s Nikkei (-1.4%) led most markets lower in Asia. China’s Shanghai Composite (+1.1%) outperformed. S&P 500 futures are higher by 13.25 points at 1902.00.
Earnings continue to flow. Dr. Pepper Snapple, Priceline and T-Mobile US are among the names reporting ahead of the opening bell. Barrick Gold, Marathon Oil, Marriott and Newmont Mining highlight the companies releasing their quarterly results after markets close.
US economic data is heavy. PPI, housing starts and building permits kick things off with their 8:30 a.m. ET release. Next, industrial production and capacity utilization cross the wires at 9:15 a.m. ET. Finally, the minutes from the January FOMC meeting are due out at 2 p.m. ET. The US 10-year yield is up 1 basis point at 1.78%.
Business Insider Emails & Alerts
Site highlights each day to your inbox.