Here is what you need to know.
Bond yields across the Euro zone are at all-time lows. Yields across the region continue lower as the European Central Bank’s quantitative easing program nears completion of its first week. Light buying in core European bonds pushed Germany’s 10-year yield to less than 19 basis points and France’s to less than 45 basis points. Meanwhile, aggressive buying of peripheral bonds has both Italy (1.04%) and Spain’s (1.05%) 10-year yield flirting with sub-1.00% prints for the first time ever.
China’s new loans beat estimates. Loans at Chinese banks grew by 1.02 trillion yuan in February, handily outpacing the 755 billion yuan growth that had been anticipated. Economists warn the number tends to be volatile this time of year because of the Lunar New Year. China’s yuan ended unchanged at 6.2625 per dollar.
Australian jobs data outpaced expectations. Australia’s economy added 15,600 jobs in February, topping the analyst estimate of an addition of 15,300 jobs. The unemployment rate fell to 6.3% from its previous reading of 6.4%. Analysts believe the Reserve Bank of Australia will still need to announce further rate cuts to get the economy back on track. Australia’s dollar is up 1.2% at .7690.
The Bank of Korea unexpectedly cut its key rate. The central bank announced a surprise rate cut of 25 basis points, lowering its benchmark interest rate to a record low 1.75%. Wednesday’s action is an effort to weaken South Korea’s won as the recent strength has been hurting exports. The won ended little changed against the dollar near 1126.
Euro zone data was mixed. Industrial production in the euro zone slipped 0.1% month-over-month, falling short of the 0.3% mum gain that was anticipated. Meanwhile Germany’s Final CPI held at 0.9% mum and France’s CPI slightly outpaced estimates with a 0.7% mum print (0.6% mum expected). The euro is higher by 0.6% at 1.0610.
Britain’s trade deficit narrowed. The UK trade deficit narrowed to 8.4 billion pounds from last month’s 9.9 billion pound deficit. The better than expected number was helped by a surge in services and the drop in oil prices. Today’s reading marked the narrowest deficit since February 2014. Britain’s pound is stronger by 0.5% at 1.5000.
Two European banks failed the Fed’s stress test. The US units of Deutsche Bank and Santander will have to address their capital planning processes, including governance and risk management. As for US banks, Bank of American needs to “address certain weaknesses in its capital planning processes” while JP Morgan Chase, Goldman Sachs and Morgan Stanley have to alter their proposals. Citigroup passed without needing to make any additional changes.
Shake Shack topped analyst estimates. The NYC-based burger chain announced a loss of $US0.01 per share, beating the $US0.03 per share loss that was expected. Sales rose 51.5% to $US34.8 million, outpacing the $US33.0 that analysts were looking for. Notable was the 7.2% jump in same store sales.
Global stock markets are mixed. China’s Shanghai Composite (+1.8%) led Asian stock markets higher while Britain’s FTSE (+0.7%) outperforms in Europe. Most of the other major European markets hover little changed.
US economic data is heavy. Initial claims, retail sales, and import/export prices are due out at 8:30 a.m. ET while business inventories crosses the wires at 10 a.m. ET. Natural gas inventories are set for 10:30 a.m. ET., and the Treasury budget is scheduled for 2 p.m. ET. The US Treasury will hold a $US13 billion 30-year bond reopening at 1 p.m. ET. The US Dollar Index trades down 0.6% at 99.20 after briefly crossing 100.00 for the first time in more than 11 years.