Archives of “March 21, 2019” day

rss

USD/JPY climbs as risk appetite improves

  
Analysis, Forex

USD/JPY back to post-FOMC levels

USD/JPY is now flat on the day in a rebound to 110.75 from a low of 110.30. The rally puts it back to where it was immediately after the FOMC decision.
The bounce coincides with a better tone in equity markets. The S&P 500 is up 9 points after a 6 point loss at the open was erased.
USD/JPY back to post-FOMC levels
At the lows, USD/JPY was at the lowest since Feb 14 but the low hit some stops.

Biogen to halt late-stage trial of promising Alzheimer’s drug

  
  Analysis

US pharmaceuticals company Biogen and its Japanese partner Eisai have announced they will cease clinical trials for a promising Alzheimer’s disease treatment, sending shares in Biogen tumbling by a quarter.

Nasdaq-listed Biogen and Tokyo-listed Eisai said in a joint statement they decided to discontinue a global Phase 3 trial of a drug known as aducanumab after a “futility analysis” conducted by an independent data monitoring committee indicated the trials were unlikely to succeed.

The drug had been applied to patients with mild cognitive impairment due to Alzheimer’s disease and mild Alzheimer’s disease dementia and had showed signs of promise after a favourable performance in mid-stage Phase 2 studies last year. The companies said the recommendation to stop the studies was not based on safety concerns.

Biogen had a market capitalisation of $63.1bn at closing bell on Wednesday and its shares were up 6.5 per cent year to date. In pre-market trading this morning, its shares were down 26.1 per cent.

BOE leaves bank rate unchanged at 0.75%; votes 0-0-9

  
Analysis, Economy

BOE announces its latest monetary policy decision – 21 March 2019

  • Prior 0.75%
  • Official bank rate votes 0-0-9 vs 0-0-9 expected
  • Asset purchase target £435 billion
  • Corporate bond target £10 billion
Here’s the statement details:
  • Underlying inflation broadly on track with forecast
  • Employment growth could now moderate significantly
  • Brexit could prompt policy moves in either direction
  • Gradual, limited tightening still probably needed
  • Monetary response to Brexit is not automatic and could be in either direction
  • Brexit uncertainties continue to weigh on confidence, short-term economic activity
Nothing too significant from the BOE here as the main talking point remains about Brexit and the central bank pretty much still has its hands tied as the Brexit saga continues to play out. The only way the BOE is able to decide on things is if the Brexit fog clears, and that doesn’t appear like it will happen any time soon.
The pound is relatively unchanged from the decision and statement here. Cable still sits at the lows for the day now at 1.3112.

China says that imports, exports rebounded in March

  
  Analysis

More attempts to talk up the economy and calm investor worries

China
  • Imports and exports trade are overall stable in Q1
  • Says that Chinese companies front-loaded exports last year
This of course comes after China’s February trade data was rather abysmal and caused concerns about the country’s economic outlook this year. They also talked up trade data for the first week of March in efforts to help soothe market participants earlier this month, so this just adds to that rhetoric.

China confirms that Lighthizer and Mnuchin to visit on 28-29 March

  
  Analysis

Comments by China’s commerce ministry

  • China vice premier, Liu He, is to visit US in early April for more trade talks
  • Says that Liu, Lighthizer and Mnuchin has had several calls recently
The headline confirms the report from overnight that they will be visiting China next week for further talks. Let’s see if they can make any more progress or if everything is going to fall apart. For now, it doesn’t look like there’s too much middle ground on this issue.

FOMC: Above Trend Growth Requires Continued Monetary Support

  
  Analysis
The Federal Reserve sounded more dovish than many expected and this prompted a 5-7 bp drop in US rates, and the dollar fell to new lows for the week against many of the major currencies.  The median Fed forecast now anticipates no hike this year but one next year.  The Fed will also taper the roll-off of its balance sheet and completing it by the end of September.
In December, 11 officials anticipated two or three hikes this year.  Now only six see one or two hikes being necessary this year.  The Fed’s economic assessment was downgraded.  It recognized that the economy slowed in Q1 from a “solid” Q4 18.  It acknowledged weakness in consumption and business investment.  It stuck by its view that the economic expansion is most likely to continue with inflation near target.  
However, the median forecast now expects that the interest rate cycle will be completed without the Fed being able to raise the fed funds target range to its long-term equilibrium rate.  In effect, they judge the economy as still requiring monetary support.  \\
The median forecast shaved this year’s GDP to 2.1% from 2.3% and next year to 1.9% from 2.0%.  The forecast for 2021 was unchanged at 1.8%.  Long-term growth is estimated at 1.9%.  This is the disconnect: An economy expected to grow above trend but still requires easy monetary policy. 
Unemployment forecast was tweaked higher (3.7% this year from 3.5% and 3.8% next year from 3.6%, reaching 3.9% instead of 3.8% in 2012.  The long-run rate–full employment is estimated at 4.3%  rather than 4.4%.  Still, Powell noted that trend jobs growth may have “stepped down.” The headline PCE deflator was shaved 0.1% to 1.8% this year, 2.0% in 2020 and 2021.  Market measures of inflation expectations are at lower levels while surveys are mostly steady.

(more…)

Go to top