Markets Kick Off the Week With a Sleepy Start
We opened the week in a pretty calm mood—no big U.S. movers to stir the pot because Presidents’ Day was in full swing. Low volumes, thin liquidity, and a shortage of fresh catalysts left the markets in what felt like a state of digital‑dormancy. Even former President Trump seemed unusually quiet on the socials, which, for him, is hardly a headline.
OPEC+’s Production Dilemma
From the few sparks that flared, the most intriguing flicker came from OPEC+. Reports hinted that the group might skip its planned production bump for April, marking yet another delay. That puts them at odds with Trump, who’s been pushing for lower oil prices. With global demand still looking dim and war‑zone uncertainties lingering, many traders are taking a short stance on crude—as the economy weakens, “drill baby, drill” won’t see the boom it hoped for.
Bank of England Reaffirms the Cautious Path
Bank of England Governor Jeremy Bailey blasted it out on the news wires—no surprises there: a gradual and careful rate‑cut approach is still the best bet. Despite last week’s positive Q4 GDP surprise, the economy remains “static.” Expecting more than one 25 bp cut per quarter now would feel like pulling a horse uphill.
Stagflation: The Shadow Over a Cautious Outlook
Stagflation keeps looming, with the cable hovering around 1.26. If spending cuts and possible tax hikes hit the fan in late March, the sweet spot might slip. Meanwhile, with cash equities and Treasury trades hitting pause across the Atlantic, markets wandered aimlessly.
Bond Markets and European Equities
- Bond side: 10‑year Bund and OAT yields climbed more than 5 bp, pointing to a souring U.S.-EU vibe, a risk premium from Sunday’s German elections, and European defense spending.
- Equity side: European stocks stayed robust—DAX hit a new ATH, CAC hit its best levels since May, while IBEX and FTSE‑MIB climbed to post‑GFC highs.
What to Keep an Eye On Today
Fasten your seatbelts for an information‑dense day.
UK Labour Market Report
What’s the rush about? The ONS report is a bit of a “shambolic” mess. Unemployment is climbing to 4.5% for the three months to December? Pay (both regular and bonuses) is up 6% year‑on‑year. No surprise that the BoE will stick with the 25 bp cuts per quarter mantra.
German Sentiment and U.S. Data
- ZEW expectations index hits its highest since July at 20.0—right before Sunday’s federal elections.
- Across the pond, investors are waiting for a template from Fed speakers, the Canadian CPI, and the BoC’s March meeting.
Bank of England’s Fireside Chat
Bailey will go on a “fireside chat” in Brussels. Why is it never actually beside a real fire? That’s a chapter for another post.
Corporate Earnings: On the Downward Trend
There isn’t much of a corporate earnings buzz today. The slate is as barren as a desert during a drought.
Stay tuned for real‑time updates!
