Eurozone economic confidence measure improves

The European Commission's economic confidence index rose in March, increasing to 96.3 from 95.5 in February, with improvements in both consumer and business confidence. On a country basis, economic confidence was weakest in Germany, although it did improve on the month. Consumers expect a continued moderation in inflation, although that does not appear to be translating into higher spending intentions, with the major purchases index remaining steady. This suggests that consumer spending in the bloc is unlikely to increase materially this quarter.

Minutes from the Bank of England’s Financial Policy Committee meeting suggest that the pressure on UK households from higher interest rates and inflation has improved somewhat in Q1, relative to Q4 2023. The committee did however caution that further falls in global commercial property price falls could pose a risk to UK financial stability.

Today’s Economic Data and Events

• 10:00 GE Retail sales (Feb) forecast: 0.4% m/m
• 11:00 UK GDP (Q4 final) forecast: -0.3% q/q
• 16:30 US GDP (Q4 final) forecast: 3.2% q/q annualised
• 16:30 US Initial jobless claims (w/e Mar 23) forecast: 212K

Fixed Income

• US treasury yields fell again on Wednesday. The 2yr yield fell 2bps to 4.5682%, while the 10y yield declined by 4bps to 4.1903%. US Fed official, Christopher Waller, said in a speech after yesterday’s market closing, that there was “no rush” to cut rates, given current “disappointing” data.
• Major European yields also fell on the day. The 10yr Gilt declined by 4bps to reach 3.9303%, while the 10yr Bund yield fell 6bps to 2.291%.

FX

• The dollar gained marginally against a basket of major peers on Wednesday, with moves in individual currency pairs mixed. EURUSD fell 0.03% to 1.0828, while GBPUSD rose 0.1% to 1.264. USDJPY fell back marginally, declining 0.15%, after having risen to a 34-year record against the dollar.
• AUDUSD gained 0.03% to 0.6535, USDCAD fell 0.12% to reach 1.3568 and NZDUSD was unchanged.

Equities

• US equities indices broke their three-day slump, gaining on Wednesday, as traders adjusted their portfolios ahead of quarter-end and the release of core PCE data on Friday. The Dow Jones gained 1.22%, the S&P 500 rose 0.86% and the NASDAQ increased by 0.51% on the day.
• European equity markets also gained on Wednesday, buoyed by improving Eurozone economic confidence data. The Euro Stoxx 50 gained 0.35%, the CAC 40 rose 0.25%; and the DAX increased by 0.50%. The FTSE 100 was broadly flat.
• Locally, the DFM fell 0.34% and the ADX declined 0.76%.

Commodities

• Oil prices fell again on Wednesday, with EIA data suggested that US crude stockpiles rose to their highest levels in a month, rising by 3.17 million barrels last week. Brent futures fell 0.19% to USD 86.09/b and WTI declined by 0.33% to USD 81.35/b. Both benchmarks have however moved higher in early morning trade.