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Tadhg Gaelach

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Dow Jones Newswires , 21 March 2017 04:52
European Morning Briefing: Markets Lack Impetus
Snapshot:
========
Stocks seen flat; EUR/USD 1.0755-58; 10-Year Bund yield 0.440%; Brent crude $51.74; gold $1228.93
-German Central Bank Chief Questions ECB Monetary Policy
-Evans Says Fed Has Made Good Progress on Its Mandates
-Germany Fires Back at U.S. Critique of Its Trade Surplus
-EU Official Says Trade Talks With U.S. in 'Deep Freeze'
-BOE's Haldane: Free Trade, Foreign Investment Should Be Preserved Post-Brexit
-Labor Reforms Threaten to Derail Greek Talks
Watch For: ECOFIN meeting; Spain trade balance; U.K. inflation, public sector finances, PPI; Fed's Loretta Mester speech; earnings from BMW, Porsche

Headline News/Outlook:
=====================
German central bank President Jens Weidmann suggested on Monday that the European Central Bank should slowly start to retreat from its easy-money policies, amid a surge of criticism of the ECB's policy stance in Germany.
"One can absolutely ask the question of whether the ECB governing council shouldn't slowly consider an exit from very loose monetary policy," Mr. Weidmann said.
Mr. Weidmann suggested that the ECB should alter its guidance to financial markets, by removing a pledge to boost its stimulus again if the economic outlook darkens. He argued that the recent increase in inflation -- to 2% last month, slightly above the ECB's target -- helps push down inflation-adjusted interest rates, so that monetary policy has grown even looser.

Federal Reserve Bank of Chicago President Charles Evans said Monday a strong economy could drive the central bank to raise rates more than the current outlook, even though he didn't call for such an outcome.
"There is some chance we could do four" rate rises as a whole for 2017, compared with the three increases officials now think are likely, Mr. Evans said, adding that the economic outlook looks relatively healthy and the central bank has made good progress on meeting its policy objectives.

Germany's top economic officials on Monday defended the nation's giant foreign surpluses, pushing back against the new U.S. administration's criticism of German trade policy.
Germany's central bank argued in a report Monday that the nation's current-account surplus -- a broad measure of its foreign trade and investment balance -- was likely to fall sharply this year, and warned it shouldn't be curbed using political tools.
Separately, a group of top economists who advise the federal government rejected international criticism and pointed the finger back at America's giant trade deficits.
"Problems can arise on both sides -- surpluses and deficits," said Jochen Andritzky, secretary-general at Germany's Council of Economic Experts. "It usually becomes a problem if the balance is tilted to one side over the long term, and the U.S. has been running a deficit for several decades now."

The European Union's chief trade official said Monday the Trump administration is sending "worrying signals" on trade, arguing that erecting barriers to global commerce threatens to kill jobs and raise prices for consumers in both developed and emerging economies.
Cecilia Malmström said the EU is seeking to bolster trade ties with partners like Canada, with which the bloc reached a trade pact last fall.
By contrast, Ms. Malmström said the EU's free trade talks with the U.S. are in a "deep freeze" as the Trump Administration seeks bilateral trade deals as opposed to multilateral or regional ones.
The EU, she said, will continue to seek liberalized trade around the world even with Britain leaving the union. That move, she said, will create the need to forge a new trade deal between the EU and Britain.

Bank of England chief economist Andy Haldane said Monday that free trade and foreign direct investment were key factors for improving the U.K.'s productivity, and as such should be important considerations in the coming Brexit negotiations.
Mr. Haldane said companies that sell their products overseas or are foreign-owned tend to enjoy higher productivity levels, thanks to participating in global supply chains.
"You'd hope that both of those features [free trade and foreign direct investment] were preserved and ideally enhanced in a post-Brexit world," Mr. Haldane said.

Finance ministers from the euro currency discussed the impasse in Greece's talks with creditors on Monday, but no breakthrough emerged on the latest conflict that threatens to derail Greece's bailout deal: workers' rights.
The International Monetary Fund is insisting on further deregulation of Greece's labor market, and rejects any reversal of earlier labor reforms, as a condition of rejoining the troubled Greek bailout program as a lender. Greece's government, however, wants to restore union powers to negotiate wages for sectors of the economy -- a cause dear to the heart of the ruling left-wing Syriza party.
Jeroen Dijsselbloem, the Dutch finance minister who presides over the meetings, said afterward that talks will "intensify" in Brussels over the coming days and weeks but added there was no promise that an agreement would be reached by the time the ministers next meet on April 7.

Stocks:
======
European stocks face another cautious open Tuesday with DAX futures up 12 points and FTSE 100 futures up 2 points.
Stocks were mixed in the Asia-Pacific region, with Japanese equities hit by a stronger yen. The Nikkei was down 0.3% with Australia's S&P/ASX 200 0.1% lower but markets elsewhere were mildly higher.
U.S. stocks slipped Monday, hurt by financials and political worries.
Political uncertainty has been breeding a "wait-and-see approach" in equity markets, said Yana Barton, a portfolio manager at Eaton Vance. "The geopolitical backdrop is going to be driving a lot of the market for the rest of the year."

Forex:
=====
The dollar fell to session lows against the yen in Asia, recently hitting a 3-week low of Y112.26.
"There is no apparent news trigger" for the pair's latest leg lower, said Mizuho Securities chief FX strategist Kengo Suzuki. "It seems investors are now willing to test" the area around Y111.60, a crucial support line so far in 2017.
In addition, the ECB's next policy step, which many expect may begin an exit from quantitative easing--and not more policy loosening--has lifted the euro, adding to dollar pressures, said FPG Securities chief executive Koji Fukaya in a note.
After hitting a low for the week at $1.0719, the euro has rebounded some in Asia to get back above $1.0740. But amid a lack of fresh trading cues for the rest of the Asia session, a Japanese bank dealer said the euro is liable to trade in a $1.07-1.0780 range.
The British pound is undervalued but "does it mean 'Go buy it now?' I don't think so," said Bart Wakabayashi, Tokyo branch manager of State Street, given looming political uncertainty.
While sterling's volatility is hinged on the U.K.'s preparation to exit the EU, he said it has benefited from the lack of real-money transactions as economic and financial news mean investors are sidelined. In the U.S. session, the pound pulled back from a 3-week high but the currency has recovered some to sit around $1.2360 in midday Asian trading.

Bonds:
=====
U.S. government bond yields fell to their lowest level in more than two weeks on Monday, extending last week's slide as the Federal Reserve soothed worries over a big rise in yields.
The yield on the benchmark 10-year Treasury note was 2.472% late Monday, compared with 2.5% Friday. It was the yield's lowest close level since March 1.
Derivative markets suggest investors are expecting bond-market fluctuations to stay contained. The Bank of America-Merrill Lynch MOVE Index fell to 60.4 last Thursday, its lowest since October. Some traders expect the 10-year yield to trade between 2.4% and 2.6%.

Energy:
======
Strong inventory growth and accelerating production out of the U.S. has kept oil prices near 4-month lows as many investors have liquidated their long positions.
But some bargain-hunting prevented prices from dropping further in Asia. While recent declines have "reduced the downside risk and added some upside potential back" into the market, Citi Futures' Tim Evans doesn't see money managers quickly returning to big-bull status on crude.
After a 1.1% drop in the U.S. session ahead of Tuesday's contract expiration, Nymex April WTI was last up 4 cents at $48.26/barrel, while May Brent, which fell just 0.3%, rose 12 cents to $51.74.

Metals:
======
London spot gold prices were down in Asia, as traders booked profits after a U.S. Fed-driven rally on expectations that future rate hikes by the central bank will be gradual.
The longer-term outlook for gold remains bullish because of uncertainty over President Donald Trump's policies and the upcoming elections in France.
At 0237 GMT, gold fell $4.27 to $1,228.93 per ounce.
Copper led declines in base-metal prices in Asia amid hopes that a strike at the world's largest copper mine may soon be resolved. The red metal also reacted to reports that Freeport McMoRan's Indonesian unit has resumed production of copper concentrate at its Grasberg mine, the world's second-largest, after a suspension of more than a month.
Three-month copper prices on the London Metal Exchange fell 1.4% to $5,795/ton while aluminum and zinc declined 0.6%.

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(MORE TO FOLLOW) Dow Jones Newswires
March 21, 2017 00:52 ET (04:52 GMT)
2017 Dow Jones & Company, Inc.
Dow Jones Newswires , 21 March 2017 04:52
European Morning Briefing: Other Top Stories

France's Political Upstart Tested in Election Debate
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BOE's Haldane Sees Innovation, Stagnation Coexisting
The weakness in global productivity growth over recent decades appears to be a consequence of a slower spread of new technologies and work practices from "frontier" nations and companies to laggards, and has little to do with central banks keeping troubled businesses afloat through low interest rates, Bank of England chief economist Andy Haldane said Monday. BOE’s Haldane Sees Innovation, Stagnation Coexisting

North Korea Has Doubled Size of Uranium-Enrichment Facility, IAEA Chief Says
Yukiya Amano, director general of the International Atomic Energy Agency, cast doubt on the chances of striking an Iran-type deal with North Korea, which he said is rapidly advancing its capacity to produce nuclear weapons. North Korea Has Doubled Size of Uranium-Enrichment Facility, IAEA Chief Says
 
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Tadhg Gaelach

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Dow Jones Newswires , 22 March 2017 04:56
European Morning Briefing: Stocks to Slide as Trump Fears Grow
Snapshot:
========
Stocks to retreat; EUR/USD 1.0799-802; 10-Year Bund yield 0.462%; Brent crude $50.85; gold $1245.32
-EU Financial Services Chief Warns Against Clashes Over Post-Brexit Financial Hub
-Economy Can Support More 2017 Rate Increases, Fed's Mester Says
-George Says Fed Is Entering Critical Phase of Normalizing Policy
-Trump Warns House GOP to Support Health-Care Bill or Risk Losing Seats
-French Interior Minister Bruno Le Roux Resigns
-BOJ's Initial Optimism Over Trump Weakened in January, Minutes Show
-Maersk Line, Hapag-Lloyd Among Shippers Subpoenaed in U.S. Price-Fixing Probe
-North Korea Fails in Missile Launch, South Korea Says
-Greek Police Discover 8 Parcel Bombs Addressed to EU Officials
Watch For: Eurozone balance of payments; earnings from Kingfisher

Headline News:
=============
The European Union's financial-services chief expressed concern Tuesday that fights are breaking out among authorities as they seek to lure financial businesses away from London following the U.K.'s decision to leave the bloc.
Valdis Dombrovksis told reporters that the European Commission was hearing criticisms from some EU countries that others were offering lax enforcement of rules to make their jurisdictions more attractive to banks and financial institutions looking to stay in the EU after Brexit.
"It's important to safeguard mutual trust among member states," Mr. Dombrovskis said.
Mr. Dombrovskis said upcoming negotiations over Brexit, which has spurred competition among the remaining 27 countries, has created suspicions among them.
Officials said these criticisms had surfaced about Luxembourg, leading to complaints from the Irish government and some other countries they didn't name. A Luxembourg spokeswoman denied that any formal complaints have been lodged against the country. She said Ireland's finance minister denied the claims reported in the media at a finance minister meeting Tuesday.
The spokeswoman also said Mr. Dombrovskis "confirmed in talks with our finance minister that there hasn't been such complaints against Luxembourg in this matter."

Federal Reserve Bank of Cleveland President Loretta Mester said Tuesday the U.S. economy is healthy enough for further increases in the Fed's benchmark interest rate this year and suggested the time may be coming to begin unwinding the central bank's asset portfolio.
"The underlying fundamentals supporting the economic expansion are sound, " she said. "Further removal of accommodation via increases in the [federal] funds rate will be needed."
The Cleveland official also said she would support addressing the central bank's $4.5 trillion portfolio this year.
"I would be comfortable changing our reinvestment policy this year," she said.
Such a move would be "a welcome acknowledgment that the economy and policy are transitioning back to normal," Ms. Mester said.
Meantime, Federal Reserve Bank of Kansas City President Esther George said the U.S. central bank is entering a critical phase of monetary policy normalization, which will include winding down the Fed's large balance sheet.
"This will be a key policy challenge moving forward for the Federal Reserve, is to begin this process of adjusting accommodation so that it doesn't tighten down the economy," she said. Decreasing the size of the Fed's $4.5 trillion balance sheet likely "won't happen quickly," however, she added.

French Interior Minister Bruno Le Roux resigned Tuesday after revelations that he used public money to employ his daughters in his office at the French legislature.
Mr. Le Roux Tuesday said he had done nothing wrong but had decided to resign to avoid disrupting the work of the ministry due to the investigation. Earlier Tuesday, French prosecutors announced a preliminary investigation into his decision to employ his daughters temporarily in positions at the National Assembly while he was member of the body.


Stocks:
======
European stocks face heavy opening losses Wednesday, with DAX futures down 85 points and FTSE 100 futures down 49 points.
Asian stock markets pulled back following declines in the U.S., as investors re-evaluated their optimism around the 'Trump trade.'
A series of recent roadblocks ahead of the coming vote to dismantle the Affordable Care Act is seeing the market question Mr. Trump's ability to deliver on his policy promises, and triggered a pullback.
Japan's Nikkei Stock Average was down 2%, opening at a three-week low and coming within 68 points of breaking below the key 19000-point level. Elsewhere, Australia's S&P/ASX 200 was down 1.4% and Hong Kong's Korea's Hang Seng fell 1%.
"It seems traders view the upcoming House health care vote as a proxy of all things Trump and his full mandate to govern," said Chris Weston, chief market strategist at IG Group.
Financials led stock declines in the U.S., which resulted in the S&P 500 and Dow industrials logging their first decline of at least 1% in five months, ending the longest streak without one since the mid-1990s.
The Dow fell 237.85 points, or 1.1%, to 20668.01, the S&P 500 fell 1.2%, and the Nasdaq Composite lost 1.8%.

Corporate News:
==============
U.S. Justice Department investigators crashed a meeting of the world's 20 biggest container shipping operators and gave subpoenas to top executives at several companies as part of a probe on price fixing, people with knowledge of the matter said.
Maersk Line, a unit of Danish conglomerate A.P. Moller Maersk and the world's biggest container shipping line, confirmed it was subpoenaed during the so-called Box Club meeting in San Francisco last Wednesday. Germany' Hapag-Lloyd also said it was handed a subpoena by Justice Department investigators.
The people familiar with the investigation said many of the CEOs at the meeting were also given subpoenas, while investigators went to the U.S. offices of other smaller operators.
A Maersk Line spokesman said the subpoena didn't "set out any specific allegations." Maersk and Hapag-Lloyd said they would cooperate fully with the U.S. authorities. A Justice Department spokesman declined to comment.

Forex:
=====
The yen rose to its highest level in nearly four months against the dollar in Asia, prompted by greater skepticism among investors about whether Mr. Trump will be able to stimulate the U.S. economy.
The potential for trade friction following a weekend meeting among the Group of 20 industrialized and developing nations also weighed on markets. At the request of the U.S., finance ministers in the G-20 dropped a longstanding clause criticizing protectionism.
"If he stumbles [with healthcare], what's going to happen going forward?" said Katsunori Kitakura, strategist at Sumitomo Mitsui Trust Bank. "Markets are becoming jittery because there haven't been any substantive achievements."
In early Asian morning trade, the dollar fell to as low as Y111.43, the lowest level since Nov. 28, and compared with Y111.73 late Tuesday in New York, according to EBS. The dollar was recently at Y111.62. The euro briefly fell to Y120.50 from Y120.77 in late New York trading.
Kenji Yoshii, foreign-exchange strategist at Mizuho Securities, said any failure to move ahead on the health bill may cause "further unwinding of the Trump trade."
The euro was also maintaining its advance against the dollar in Asian trading after Monday's French presidential debate helped calm investor concerns about the possibility of a victory by far-right candidate Marine Le Pen.
Mizuho Securities has put upside resistance during the Asian day at $1.0850, but said a run by month's end toward the 200-day moving average of $1.1089 can't be ruled out. Toshihiko Sakai, a forex trader with Mitsubishi UFJ Trust and Banking, said the euro will likely see some pullback before April arrives once markets are convinced there is little risk arising from the French election.
At 0450 GMT USD/JPY was 111.68-69, EUR/USD was 1.0799-802 and GBP/USD was 1.2476-78.

Bonds:
=====
A broad retreat of the Trump trades rippled into the U.S. government bond market Tuesday, sending the yield on the benchmark 10-year Treasury note to the lowest level this month.
The yield on the 10-year note settled at 2.432%, compared with 2.472% Monday. It was the yield's lowest close level since the end of February.
The 10-year JGB yield hit a 3-week low in early Asian trade, down a half-basis point to 0.055%. Lead JGB futures were up 0.14 at 150.41.

Energy:
======
The risk-off trade seen across asset classes during the U.S. session continued into Wednesday in Asia.
For oil, this has been compounded by a bearish inventory reading from the American Petroleum Institute, which said U.S. supplies rose by 4.5 million barrels last week. That's double what analysts on average anticipate the growth in the government's reading Wednesday will show.
Hitting markets has been the unwinding of the "Trump Trade," which helped push up assets like stocks, the dollar and some commodities in recent months amid hope that the new administration would unleash pro-growth policies. But there has been scant movement on that front thus far. Also hitting oil is expected export resumptions from Libya.
After futures fell more than 1% at he the end of U.S. trading, May WTI was recently down another 1.5% at $47.50/barrel while Brent was off 0.2% at $50.85/barrel.

Metals:
======
London spot-gold futures hit a 3-week high in Asia, up $1.39 at $1,245.32/troy ounce, as investors moved from riskier assets.

Write to [email protected]

(MORE TO FOLLOW) Dow Jones Newswires
March 22, 2017 00:56 ET (04:56 GMT)
2017 Dow Jones & Company, Inc.
Dow Jones Newswires , 22 March 2017 04:56
European Morning Briefing: Other Top Stories

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