BOE Keeps Rates Unchanged in Overnight Activity

Lou Brien |

*Stocks were mostly higher in Asian trade. Australia rose 2.1%, Shanghai added one and a half percent, while the Hang Seng was up one percent; the Nikkei was an exception, it fell 0.8%. European indexes are mixed this morning, with the Footsie up one percent and the DAX flat. US stock futures are essentially unchanged as I write.

*The ECB will not surrender to low inflation, said bank president Draghi in his speech this morning at the Bundesbank office in Frankfurt. “The risks of acting too late outweigh the risks of acting too early,” he told the crowd that included Buba boss Weidmann, who is among the group of ECB council members who are not so concerned about the possibility of deflation. But it sounds like Draghi persists on pushing the bank into further action when they meet next month; “There are forces in the global economy today that are conspiring to hold inflation down. Those forces might cause inflation to return more slowly to our objective, but there is no reason why they should lead to a permanently lower inflation rate…What matters is that central banks act within their mandates to fulfil their mandates.”

*The Bank of England voted unanimously to keep rates and stimulus unchanged at their policy meeting earlier today. Ian McCafferty had been voting to raise rates for the last six months, but today he gave up his dissent. The BOE now figures that falling energy prices will keep inflation below one percent most of this year. Since inflation is so far from the two percent target Governor Carney had to write another letter, the fifth in the last year, to Chancellor Osborne to explain why it is too low and what he will do to get it up to the target.

*The Challenger Group says that in January there were 75,114 job cut announcements; 41.6% more than last January and up 51k from December. This is more job cut announcements for any month since last July and the most for any January since 2009.

*The weekly report on Initial Jobless Claims is due out at 7:30am CST, it is expected to be 278k. Also due out at 7:30am is the preliminary Q4 reading of Nonfarm Productivity, which is forecast to be -2.0%; the estimate for the Unit Labor Costs component is +4.3%. The December reading of Factory Orders is due out at 9:00am CST, it is expected to be -2.8% month on month. Also set for release at 9:00am is the final December revision for Durable Goods Orders; the original reading for the headline figure is -5.1%, but it is expected to be revised to -4.5%.

*The weekly report on inventories of Natural Gas is due out at 9:30am CST, it is expected to show a decline of 154 bcf.

*Two Fed speakers are on the calendar today, including: Dallas’ Kaplan will talk about the global economy at 7:30am CST and Cleveland Fed’s Mester will give a speech at 4:00pm CST.*Stocks were mostly higher in Asian trade. Australia rose 2.1%, Shanghai added one and a half percent, while the Hang Seng was up one percent; the Nikkei was an exception, it fell 0.8%. European indexes are mixed this morning, with the Footsie up one percent and the DAX flat. US stock futures are essentially unchanged as I write.


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