- Fink š§
- Posts
- Rishi's Goldilocks Tightrope, OPEC Decision Looms
Rishi's Goldilocks Tightrope, OPEC Decision Looms
Rishi To Deliver?
At around 12:30 today, the Chancellor will take centre stage.
He's walking a Goldilocks tightrope, and some (all?) measures have already been released via the media.
Now he needs to sell it.
The fiscal cliff-edge looks to be avoided by phasing out the furlough measures between July & September, with employers gradually paying a larger share of the tab.
He's already flagged the need to increase taxes...
āOnce we are on the way to recovery, we will need to begin fixing the public finances and I want to be honest today about our plans to do that,ā
This will be the key battle/balance - allowing the economic recovery to take shape, whilst giving a nod to addressing the fiscal deficit.
It's also about selling a vision.
A clear vision for the future, building back better and every other clichƩ.
Sunak is an excellent speaker: gun to my head, I'm backing him to win the markets over today.
A few previews - take your pick
I've been agonising over this for days, and just cannot figure out with any degree of confidence how the market is going to react.
It's clear that more supply will be returning, but how much, how fast, and how the Saudis roll back their voluntary cut is up in the air.
If I had to call it, I think the Saudis will agree to roll back their voluntary cut gradually rather than dump it back in all at once.
I'll put the odds at 52/48 in favour of a managed return...
For me, the demand picture simply isn't clear enough to dump a load of supply back all at once, as mentioned here š
U.S crude inventories rose to 7.36 million last week, according to yesterday's API report.
More Stuff I Found Interesting
U.S. recovery is going to lead the world
My discussion with @cnbc ā¦@JeffCoxCNBCcomā© on the economic boom in the US economy that Iām expecting to begin mid-year. https://t.co/1HdN68j36Iā Joseph Brusuelas (@joebrusuelas) March 2, 2021
But this won't lead to sustained inflation...
Goldman Sachs: āWe forecast core PCE inflation to peak at 2.4% in Aprilābolstered by the year-on-year comparison to the April 2020 lockdownsāand end the year at 2.0%.ā pic.twitter.com/0G4CayDYaHā Michael S. Derby (@michaelsderby) March 3, 2021
āWeāre now on track to have enough vaccine supply for every adult in America by the end of May,ā President Biden says https://t.co/wtUlJhHFuR pic.twitter.com/GxP5LvlE3Dā Bloomberg Quicktake (@Quicktake) March 2, 2021
The reopening has begun....
Texas governor lifts state's mask mandate, business restrictions
āIt is now time to open Texas 100%,ā Abbott said at an afternoon news briefing.
The full lifting of the mandates will take effect on March 1https://t.co/mamZHRHg8vā Macrodesiac (@macrodesiac_) March 2, 2021
And the individual states already reaching herd immunity...
Yesterday saw the first Fed comments on the bond moves last week...
Brainard:
āI am paying close attention to market developments. Some of those moves last week and the speed of the moves caught my eye,ā
They may still be feared by bankers elsewhere, but negative retail deposit rates have now gone mainstream in Denmark.
Fourth-quarter results show that all Denmarkās largest banks have started charging their retail depositors for amounts as low as $16,000, marking the biggest pass-through in the world of negative central bank rates to regular customers via their banks.
Germanyās biggest lenders, Deutsche Bank AG and Commerzbank AG , have told new customers since last year to pay a 0.5% annual rate to keep large sums of money with them. The banks say they can no longer absorb the negative interest rates the European Central Bank charges them. The more customer deposits banks have, the more they have to park with the central bank.
That is creating an unusual incentive, where banks that usually want deposits as an inexpensive form of financing, are essentially telling customers to go away. Banks are even providing new online tools to help customers take their deposits elsewhere.
ECB's De Guindos is speaking at 3PM today...
'After Covid,: A stronger Europe? The future interplay of monetary & fiscal policy'
Interesting title, probably a load of guff but it's a key theme so will be keeping an eye out just in case.