Here is what you need to know.
Heinz and Kraft Foods announced a mega merger.The deal gives Heinz a 51% ownership in “The Kraft Heinz Co,” and 49% ownership to Kraft shareholders. Kraft shareholders are set to receive both stock and a $US16.50 special dividend. The deal was financed by a $US10 billion contribution from Berkshire Hathaway and Brazilian private equity firm 3G.
The ECB has told Greek banks to stop buying their government’s debt. The European Central Bank is putting the pressure on the Greek government to reach a deal with its creditors. Today’s order will take a large buyer of Greek debt out of the market as the country looks to roll over the maturing debt due in early April. Greece’s 3-year yield is flat at 19.03%.
German economic data continues to outperform. Germany’s Ifo Business Climate was the latest number to top estimates. Today’s reading of 107.9 (107.4 expected) was the strongest since July as Germany powers ahead thanks to the ECB’s negative interest rate policy weakening the euro. Germany’s 10-year yield is down 1.7 basis points at 21.7 basis points.
The Reserve Bank of Australia’s Financial Stability Review concluded that financial stress is easing. Australia’s central bank noted, “Business finances appear generally in good shape,” but, “Like households, businesses remain fairly cautious in their spending and borrowing decisions, despite the low interest rates.” Today’s review pointed to the commercial property, and mining and resources sectors as areas which continue to see difficulty. The Australian dollar is unchanged at .7880.
South Korea’s economy grew 3.3% in 2014. Today’s print was in-line with January’s estimate, and marked a slight improvement over the 2.9% growth experienced in 2013. A slowdown in exports to 2.8% growth (4.3% in 2013) caused the central bank to unexpectedly cut its benchmark interest rate to a record low 1.75% because approximately 50% of South Korea’s GDP is linked to the number. South Korea’s won gained 0.3% to 1101.
Moody’s cut Ukraine’s debt rating. The rating agency cut Ukraine’s sovereign debt rating to Ca from Caa3 and maintained its negative outlook. According to Moody’s, “The key driver of the downgrade is the likelihood of external private creditors incurring substantial losses as a result of the government’s plan to restructure the majority of its outstanding Eurobonds.” The new debt rating is the second lowest offered by the rating agency. Ukraine’s hryvnia is lower by 1.2% at 23.50 per dollar.
New Zealand and Japan are pressing the US to approve a trade bill. The bill must still get through Congress, and both countries believe it is necessary to complete the 12-nation Trans Pacific Partnership.
The US 10-year yield holds near a 7-week low. The benchmark yield is little changed at 1.87%. The benchmark yield is roughly 40 basis points off its March high.
Global equity markets trade mixed. France’s CAC (-0.6%) paces the decline in Europe while Hong Kong’s Hang Seng (+0.5%) led Asian markets higher. China’s Shanghai Composite (-0.8%) was a laggard.
US economic data is light. Durable orders will be released at 8:30 a.m. ET. Crude oil inventories are scheduled to cross the wires at 10:30 am ET. Treasury will auction $US35 billion 5-year notes.