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Germany Business Confidence Drops in February





Sentiment among German businesses dropped in February, according to a closely watched survey that comes on the heels of other polls indicating enthusiasm is easing after hitting multi-year peaks.


The Munich-based Ifo economic institute said its business climate index, based on a monthly survey of some 7,000 companies, declined to a 5-month low of 115.4 from 117.6 in January. The drop in the German headline figure was mainly caused by managers scaling back their business expectations for the next six months, with the respective sub-index dropping to a 10-month low.


A sector breakdown of the Ifo figures revealed that the main impediment came from manufacturing, where the mood among managers had reached a record peak in January. Business sentiment also deteriorated in wholesaling, construction and retailing.


The Ifo data come a day after a survey of German purchasing managers also pointed to a decline in output growth expectations.


Ifo chief Clemens Fuest said firms were less satisfied with their current business situation, but the indicator remains at its second-highest level since 1991.


This upbeat growth outlook was also mirrored in the finance ministry's monthly report that was recently released which said recent data was pointing to a continuation of the economic upswing at the beginning of the year.


Germany is coming off of a year of strong economic expansion. Economists broadly expect the country to continue performing well in 2018, but some have questioned whether the rapid pace can hold.


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BOJ has no Plan Conduct Another Policy Review: Kuroda





Bank of Japan Governor Haruhiko Kuroda said that conducting another comprehensive assessment of the central bank's monetary policy is currently not on the table.


Speaking to the parliament, the head of the Japanese central bank said that things are progressing smoothly, so there are no plans at this stage to hold another comprehensive review, citing the steady recovery in the economy.


The comments were made by Haruhiko when asked by a legislator whether BOJ would conduct an assessment of why its policy had failed to drive up inflation to its 2 percent target.


He reaffirmed the BOJ's resolve to retain its massive monetary stimulus with inflation far from its target.


The central bank overhauled its policy framework to one targeting interest rates from the rate of monetary printing in 2016, after three years of massive asset purchasing failed to accelerate prices pressures.


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UK Services Sector Logs Strong Growth: CBI





UK services sector registered strong growth in business volumes in three months to February, the latest Services Sector survey from the Confederation of British Industry showed Monday.


Both business and professional services and consumer services logged a rise in profits for the first time since November 2015.


Business and professional services said their business volumes grew at the fastest pace since August 2015, and growth is set to accelerate further in the three months to May.


In the consumer services sector, volumes grew at the fastest pace in a year. Consumer services growth is expected to ease next quarter, but nonetheless remain firm. Rain Newton-Smith, CBI chief economist, said "It's great to see the services sector start the year off on a firm footing."


"Despite feeling the pinch from high inflation, business volumes have bloomed, profits have grown for the first time in over two years and hiring is on the up."


Prices continued to rise in consumer services but were flat in business and professional services. Next quarter, price growth is expected to accelerate in both sub-sectors, survey showed.


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Bank Of Korea Keeps Benchmark Interest Rate Unchanged At 1.50%





The Bank of Korea's monetary policy board on Tuesday voted to hold the nation's benchmark interest rate steady at 1.50 percent, in line with expectations.


The decision was the first since the bank hiked rates by 25 basis points in November, marking the first change in the benchmark in 14 months. It also marked the bank's first rate hike since 2011.


The rate had been static since June of last year, when the bank trimmed the rate from 1.50 percent.


Persistently low inflation and touches of softness in the economy allowed the central bank to leave the monetary stimulus in place.


"The board considers that the acceleration in global economic growth has continued. Volatility in the global financial markets has increased substantially, with government bond yields rising and stock prices falling in line mainly with strengthening expectations of monetary policy normalizations in major countries," the bank said.


Consumer prices were up 0.9 percent on year in January - well shy of forecasts for 1.5 percent, which would have been unchanged from the December reading. On a monthly basis, inflation was up 0.5 percent, accelerating from 0.3 percent in the previous month.


Core CPI, which excludes food prices, gained 0.2 percent on month and 1.1 on year after rising 0.2 percent on month and 1.5 percent on year a month earlier.


Producer prices gained 1.2 percent on year in January, slowing from 2.2 percent in December. On month, producer prices gained 0.4 percent after remaining flat in December.


"Looking ahead it is forecast that consumer price inflation, after remaining in the low- to mid-1% range for some time, will pick up and gradually approach the target level from the second half of this year. Core inflation will also gradually rise," the bank said.


South Korea's gross domestic product contracted a seasonally adjusted 0.2 percent on quarter in the fourth quarter of 2017. That missed forecasts for an increase of 0.5 percent following the 1.5 percent jump in the three months prior.


On a yearly basis, GDP gained 3.0 percent - again missing expectations for 3.2 percent and down from 3.8 percent in the previous three months.


For all of 2017, South Korea's GDP was up 3.1 percent.


"The board expects domestic economic growth to be generally consistent with the path projected in January. It anticipates that investment will slow, but that the trend of steady increase in consumption will continue," the bank said.


South Korea's unemployment rate eased to 3.6 percent in January from 3.7 percent in December, which was revised up from 3.6 percent.


South Korea posted a merchandise trade surplus of $3.7 billion in January, marking the 72nd straight months in the black.


Exports jumped 22.2 percent on year to $49.21 billion in January - climbing in 15 straight months and up from $40.25 billion a year earlier.


Imports spiked an annual 20.9 percent to $45.48 billion.


"Looking ahead, the board will conduct monetary policy so as to ensure that the recovery of economic growth continues and consumer price inflation can be stabilized at the target level over a medium-term horizon, while paying attention to financial stability," the bank said.


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Qualcomm to Consider Broadcom Takeover Bid on Higher Price Tag





Qualcomm had a change of heart regarding an acquisition offer by its rival Broadcom, stating it is open to considering the bid if it is raised to $160 billion including $25 billion in assumed debt, according to sources cited by Financial Times.


The change in the company's stance marks a big change for Qualcomm executives, who have been opposing the deal on antitrust grounds. Sources close to Qualcomm said that Broadcom has recently made sufficient progress in tackling the competition issues in order to make way for talks to reach a phase where the two parties can reach an agreed price.


Qualcomm is seeking that Broadcom sweetens its offer by at least 15 percent to above $90 per share, up from its present $79 per share offer, to achieve what would be the biggest tech deal ever brokered, according to people knowledgeable of the proceedings. The total $160 billion price tag would include Broadcom taking on $25 billion in Qualcomm debt.


Several sources close to Qualcomm's senior management said the firm is now open to sealing the deal, but the takeover depends on Hock Tan, Broadcom's CEO, who can decide whether to change course and increase his offer price.


Qualcomm has sent a letter to Tan, expressing the team's interest in pursuing a non-disclosure deal that would enable the two parties to begin due diligence. Qualcomm chairman Paul Jacobs also called for the two chipmakers to set a meeting to negotiate a price as soon as possible. The proposals were dismissed by Broadcom, but said that it was ready to discuss terms that were 'realistic' for both companies.


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Japan Industrial Output Falls 6.6% In January





Industrial production in Japan contracted a seasonally adjusted 6.6 percent on month in January, the Ministry of Economy, Trade and Industry said in Wednesday's preliminary reading.


That missed forecasts for a decline of 4.0 percent following the 2.9 percent gain in December.


On a yearly basis, industrial production added 2.7 percent - again missing forecasts for 5.3 percent and down from 4.4 percent in the previous month.


Upon the release of the data, the METI maintained its assessment of industrial production saying that it is picking up slowly.


Industries that weakened in January included transport equipment, business-oriented machinery and electronic parts and devices.


Shipments were down 5.6 percent on month and up 4201percent on year.


Industries that were down included transport equipment, business oriented machinery and electronic parts - while communications electronics equipment was up.


Inventories shed 0.6 percent on month and climbed 1.4 percent on year. Industries in contraction included business oriented machinery, transport equipment and iron and steel.


Industries that were up included ceramics, non-ferrous metals and chemicals.


According to the survey of production forecast, industrial output is expected rise 9.0 percent in February and fall 2.7 percent in March.


Industries that are expected to contribute to the increase in February include business oriented machinery, transport equipment and electronic parts.


Industries expected to contribute to the decline in March include electronic devices, electrical machinery and transport equipment.


Also on Wednesday, the METI said that retail sales in Japan were down a seasonally adjusted 1.8 percent on month in January.


That missed forecasts for a decline of 0.6 percent following the 0.9 percent gain in December.


On a yearly basis, retail sales advanced 1.6 percent - again missing expectations for a gain of 2.4 percent and slowing from 3.6 percent in the previous month.


Sales from large retailers advanced an annual 0.5 percent - exceeding forecasts for 0.4 percent and slowing from 1.1 percent a month earlier.


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Fed’s Powell Sees Strong Economy, Strikes Hawkish Tone for Policy





In his first public appearance as the head of the U.S. central bank, Federal Reserve Chairman Jerome Powell pledged to prevent the economy from overheating while staying on course of a path of gradually hiking interest rates.


In his testimony before the U.S. House of Representatives' Financial Services Committee, Powell gave a nod to the economy's recent show of strength, a comment that investors perceived as hawkish and increased bets on four rate increases in 2018.


The central bank's last wave of economic projections in December indicated three rate hikes this year.


But Powell's overall tone was that of continuity, as he told legislators that the Fed would balance the need to prevent excessive inflation with the benefits of allowing the economy to take advantage of the benefits of the tax cuts and solid global growth.


He said that the Fed was currently assessing how low employment could fall before inflation began to bite. The U.S. jobless rate is at a 17-year low of 4.1 percent.


Powell added that some of the challenges the economy faced in prior years have become tailwinds, noting the recent change in fiscal policy and a global economic recovery. But he also noted that inflation continues to be below the 2 percent target. In the FOMC's perspective, he said that further gradual rate hikes in the federal funds rate will best help them reach both objectives.


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COLOMBIA: Bogot? Asks Caracas To Open Humanitarian Channel





The President of Colombia Juan Manuel Santos asked the Venezuelan government to allow at least one humanitarian channel to alleviate the situation of the country's population.


According to him, Venezuela's trouble is "an issue that greatly concerns us." He added that both Colombia and Peru are receiving significant inflows of Venezuelan migrants.


Santos said that both countries are concerned "not only with the social situation that the Venezuelan people are experiencing, and the crisis that the country is experiencing and the repercussions on the population," but also with what he called as "the destruction of democracy, disrespect, and violation of all the fundamental rights of Venezuelan citizens and the overflow of democratic institutions."


Santos also stressed that Colombia and Peru would continue to insist "until we see Venezuela with a functioning democracy again."


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Eurozone Inflation Drops in February, Highlights ECB Caution





Eurozone inflation fell to a 14-month low in February, which highlights the European Central Bank's caution in removing stimulus despite growth surpassing expectations and the bloc's economy appearing to be on its best shape in a decade.


Official figures from the EU's statistics agency Eurostat showed the headline year on year inflation rate dropped from 1.3 percent to 1.2 percent in February, its weakest level since December 2016.


A closely watched measure of underlying inflation which excludes volatile energy and unprocessed food prices remained steady at 1.2 percent.


Inflation in services and non-energy industrial goods actually rose over the period, and Pantheon Macroeconomics' Claus Vistesen suggested “only unfavourable rounding kept the core rate from nudging higher to 1.1 percent”.


Energy prices in particular have been driving a decline in headline inflation rate for several months, while February's figure was also affected by a sharp pull-back in food price inflation


Hoping to raise inflation back to target after years of misses, the ECB has purchased more than 2 trillion euros ($2.45 trillion) worth of bonds in the past three years to boost investment and consumption.


Policymakers have warned that a stronger euro could threaten the ECB's medium-term goal of keeping inflation below, but close to, 2 percent, but despite the currency's impressive recent gains against the dollar, it has remained fairly stable on a trade-weighted basis over the last six months.


The data had little immediate impact on the euro, which was down around 0.15 percent against the dollar at publication time.


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Treasury Yields Slide as Trump Slaps Tariffs on Steel, Aluminum Imports





Prices of U.S. government bonds edged up, driving down yields, as investors hurried to secure safe-haven government paper after the Trump administration announced its decision to impose global tariffs on steel and aluminum imports that triggered a stock-market selloff.


In his second testimony to the Congress, Federal Reserve Jerome Powell said he saw no indications of solid wage pressure, language that some market participants aw as an effort to backtraw his hawkish comments earlier in the week. The 10-year Treasury note yield declined 6.7 basis points to 2.802 percent, denoting the biggest one-day decline since September 5, according to WSJ Market Data Group.


The two-year note yield, the most affected by the monetary policy outlook, edged down 5.6 basis points to 2.206 percent, marking the biggest one-day decline in three weeks. The 30-year bond yield fell 4.6 basis points to 3.084 percent.


The last two days of trading has helped to counter some of the selloff in February when a revival of inflation worries weakened the appetite for bonds.


Treasury yields climbed after President Donald Trump announced levies on steel and aluminum imports, causing stocks to slide. Jittery investors flocked to government paper to secure safe-haven assets to protect themselves against market volatility.


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