US and eurozone consumer confidence hit one-year highs; German inflation jumps – as it happened

Graeme Wearden

from on 2021-03-30 16:25 (#5FYFV)

Rolling coverage of the latest economic and financial news

On Archegos....

5.24pm BST

Time for a recap

US consumer confidence has leapt sharply this month, hitting its highest level since the pandemic began. Stimulus spending and vaccine rollout are spurring hopes of an economic recovery.

BREAKING! US house prices rose by more than 11% YoY in January, the fastest rise since March 2014. #realassets pic.twitter.com/aRo4nVbRxI

Rapid rebound in German #inflation illustrates how quickly the Covid shock can unwind: HICP measure already back to 2% in March, led by higher energy prices (UK CPI could be there in April)

(h/t @CapEconEurope for the chart) pic.twitter.com/txkC5yEt2t

The increase in German HICP inflation to 2.0% in March is not the end of the upward trend. We expect rising energy prices and some further unwinding of the factors which suppressed it last year to push the headline rate above 3% in the second half of 2021. https://t.co/cZGj1D2Sgx pic.twitter.com/DoRGBBYQeE

This is a challenging time for the family office of Archegos Capital Management, our partners and employees.

All plans are being discussed as [founder] Mr. Hwang and the team determine the best path forward."

5.09pm BST

Today's burst of economic optimism has propelled European stock markets to a new one-year high.

The Stoxx 600 index jumped 0.8% to finish at 431 points - close to its record highs in February 2020, just before the pandemic struck Europe.

Markets in Europe have continued to focus on the recovery narrative, putting aside concerns over recent events in the US and last week's block trade blow out, as well as the economic picture in Europe which continues to look dire as infection rates rise further.

Financials are leading the gainers, despite concern about their exposure to the Archegos Capital blow up, with Credit Suisse lower again, with the rest of the sector gaining on the back of higher yields led by the likes of Barclays whose shares are back up close to last week's high and their best levels in over a year. Lloyds Banking Group shares are also higher, still below their pre pandemic peaks but still looking good for further gains and making new one-year highs.

4.44pm BST

Britain's FTSE 100 index has closed 35 points higher at 6772 points, a rise of 0.5% today.

Bank shares were among the best performers, as worries about the fallout from Archegos's failure faded, and hopes of an economic recovery rose.

4.39pm BST

Shares in US financial group Wells Fargo have jumped 3%, after it reported that it hadn't incurred losses through its involvement with Archegos Capital.

In a brief statement, Wells Fargo explained that it had a prime brokerage relationship with Archegos, but didn't experience losses from the unwinding of the fund's positions (after it couldn't meet margin calls from lenders).

We had a prime brokerage relationship with Archegos.

We were well collateralized at all times over the last week and no longer have any exposure. We did not experience losses related to closing out our exposure."

Wells Fargo Says No Losses Taken on Archegos Capital, Shares Gainhttps://t.co/x2hOKytj5n @mdbaccardax $WFC #archegoscapital

4.20pm BST

The US dollar has rallied today, on the back of the strong consumer confidence numbers.

That's pushed sterling down to $1.372, a drop of almost a half a cent.

Soaring #US consumer confidence in March paints a much rosier outlook for US economy, sparks bid for #USD, DXY +0.31% at 93.22

4.10pm BST

The surge in US consumer confidence this month is a clear sign that America's recovery is gathering pace.

And that could drive bond yields higher, predicts Robin Brooks, chief economist at the IIF.

We're entering a new phase in the US bond market sell-off. So far, the sell-off has been about expectations for the GDP rebound. We're now shifting to hard data, starting with today's jump in consumer confidence & Friday's payrolls. This could super-charge the rise in yields... pic.twitter.com/jEaB5viKCq

3.53pm BST

European stock markets are also ending the day strongly, with Germany's DAX on track for a new closing high.

#FTSE 6780.59 +0.66%#DAX 15016.23 +1.34%#CAC 6090.09 +1.24%#AEX 702.09 +0.59%#MIB 24689.8 +1.10%#IBEX 8606.5 +1.35%#OMX 2202.672 +0.94%#STOXX 3927.61 +1.15%

3.47pm BST

Back in London, stocks are pushing higher again.... with the FTSE 100 index now up 44 points or 0.65% at 6780 points.

Banks are having a good afternoon -- the jump in consumer confidence in the US and also in Europe is good for their prospects, while rising bond yields signals higher inflation on the way (as we've already seen in Germany).

3.32pm BST

And here's a bit more:

The @Conferenceboard Consumer Confidence Index(R) surged to its highest reading in a year in March: 109.7 (+19.3pt)

Present Situation: 110.0 (+20.4pt)

Expectations: 109.6 (+18.7pt)

Consumers feeling optimistic abt labor market & expecting conditions to improve. pic.twitter.com/pVT3NIW5Lq

The surge in cases is troubling, but in spite of ourselves deaths are finally below 1000 daily. Nothing to celebrate, but it's an important milestone, and one reason Consumer Confidence crushed estimates this morning. #COVID19 pic.twitter.com/E1z1ydm6Zn

3.30pm BST

Here's some early reaction to the blowout US consumer confidence report:

US Consumer Confidence Explodes Higher In March https://t.co/EzLeTvDQnB pic.twitter.com/Jy35FF3MEY

From this morning's consumer confidence data:

* Those who plan to buy car/truck: highest since July

* Plan to buy major appliance: highest since last February.

* Plan to buy home: highest since this survey began in 1967.

(via @pboockvar)

Consumer Confidence came in at 109.7 versus expectations of 96.9. From our Economic Indicator Database, that is the strongest reading for Consumer Confidence relative to expectations since at least 2000: https://t.co/J1GeJIp8Rs pic.twitter.com/kQkEezXrkz

3.13pm BST

Boom! US consumer confidence has jumped to its highest level since the pandemic began, lifted by hope of a strong economic recovery.

The Conference Board's Consumer Confidence Index surged to a one-year high of 109.7, up from 90.4 in February. That's a really powerful monthly move.

Thank you, Stimmy! Consumer Confidence surges way more than expected in March to highest in a year.#stimmycheck pic.twitter.com/zWHXGqGmc0

Consumer Confidence increased to its highest level since the onset of the pandemic in March 2020.

Consumers' assessment of current conditions and their short-term outlook improved significantly, an indication that economic growth is likely to strengthen further in the coming months. Consumers' renewed optimism boosted their purchasing intentions for homes, autos and several big-ticket items.

Consumer Confidence Highest in a Year https://t.co/2AaDCbxeM8 pic.twitter.com/AzQyS0g3fR

2.45pm BST

In New York, stocks have opened a little lower as the jump in US government bond yields weighs on tech stocks.

Here are the early prices.

BREAKING:

*STOCKS ON WALL STREET OPEN LOWER AS RISING BOND YIELDS WEIGH ON TECH SHARES https://t.co/c2YtNoxoA3 $DIA $SPY $QQQ $IWM $VIX pic.twitter.com/vAcTCWbg9T

2.35pm BST

OOPS! #Germany's inflation rate accelerated in March to 1.7% from 1.3% in Feb, the highest level since Feb2020, driven by a jump in fuel costs, the expiration of temporary sales-tax cuts, a boost in the country's minimum wage, and changes to the composition of the price basket. pic.twitter.com/puYYiiYO3x

2.31pm BST

Over in Germany, inflation has risen smartly this monthly, as energy prices pushed up the cost of living.

The German consumer prices index rose to 1.7% per year in March, up from 1.3% in February, according to a new estimate from the Federal Statistics Office.

German inflation back to pre-Covid levels. pic.twitter.com/qxqJzGx1nF

Inflation rate expected to be +1.7% in March 2021: https://t.co/mhL3OfF50k

With supply chain disruptions, like higher container prices, delivery problems with semiconductors and most prominently, the recent problems in the Suez Canal, producer prices are set to increase further, possibly putting more pressure on consumer prices.

Add to this a post-lockdown reflation in some sectors and the reversal of the German VAT rate and for German (and eurozone) inflation, the only way is up. In our view, German headline inflation could eventually range between 3% and 4% in the second half of this year.

Today's German inflation numbers suggest that this commitment has come not a moment too soon.

Germany: From 1 to 2, to 3, to...German inflation counting | Snap | ING Think - Headline inflation continued its upward trend in March and will continue to do so in the coming months. The European Central Bank's commitment to look... https://t.co/OmDwFQ3WYQ

2.14pm BST

PayPal's move to allow transactions in crypto currencies could push bitcoin to fresh heights, reckons Samuel Indyk, senior analyst at uk.Investing.com:

One of the biggest criticisms of cryptocurrencies is that they do not have any real-world usage but when one of the world's largest digital payments companies begins allowing transactions in cryptocurrencies, then there is every reason to believe Bitcoin can reclaim and surpass its all-time high above $60,000.

In fact, it would not come as a surprise to see Bitcoin reach $100,000 by the end of the year as cryptocurrencies garner further corporate interest and attention from institutional and retail investors.

Companies with ambitions to accept Bitcoin as a form of payment will need to remember the importance of responding to global anti-money laundering regulatory regimes.

Crypto assets have long been criticised for facilitating financial crime including money laundering and fraud.

1.49pm BST

While gold struggles, bitcoin has rallied today after PayPal launched its Checkout with Crypto" service.

It means that US customers with cryptocurrency holdings in their PayPal wallet will be able to choose to pay for goods or services at millions of global online businesses" using those crypto assets.

Building on the ability to buy, hold and sell cryptocurrency with PayPal, customers using Checkout with Crypto can check out safely and easily, converting cryptocurrency holdings to fiat currencyat checkout, with certainty of value and no additional transaction fees.

Checkout with Crypto will automatically appear in the PayPal wallet at checkout for customers with sufficient cryptocurrency balance to cover an eligible purchase.

Customers who hold #Bitcoin, Ethereum, Bitcoin Cash and Litecoin in PayPal digital wallets will now be able to convert their holdings into fiat currencies at checkouts to make purchases, the company said https://t.co/wKmmLU3o5g via @annairrera

1.06pm BST

This morning's jump in eurozone economic confidence is supporting European stocks today, says Sophie Griffiths, Market Analyst at OANDA.

With Germany's DAX at a new all-time high, investors do seem to be looking beyond the short-term risks from Covid-19.

Following on from a record close on the Dow, equities across Europe are pushing higher, boosted by the prospect of a strong economic recovery in the US. The mood in the market is upbeat, surprisingly so given the third wave of covid which is sweeping across the old continent.

Eurozone economic sentiment and French consumer confidence both came in significantly ahead of expectations, with the latter hitting its highest level since December.

12.55pm BST

One for the historians....

#Gold back to $1688 - trying to think of a William III/Glorious Revolution reference... pic.twitter.com/KCc8wCMM3j

12.52pm BST

Gold is falling further, hit by the move into riskier assets and a strengthening US dollar today.

That's pulled bullion down by 1.5% to $1,686 per ounce, a new three-week low.

#Gold Price in US Dollar vs US Dollar Index today (Mar. 30, 2021) - via https://t.co/NjtSzxxNhA pic.twitter.com/eWxlf6rBjR

12.37pm BST

After a positive start, shares in Credit Suisse have fallen into the red.

They're currently down 2.6% -- adding to yesterday's near-14% tumble.

Credit Suisse down another 3% today https://t.co/HTIEV1N4pL pic.twitter.com/zjRQcnshHV

Pressure was mounting on Credit Suisse on Tuesday over losses linked to the downfall of Archegos Capital, with analysts warning its dividend and share buyback plans may need to go on hold and investors advised to vote against management pay.

Losses at Archegos, a family office run by former Tiger Asia manager Bill Hwang, sparked a sell-off in bank stocks on Monday as investors feared they would be forced to take big write-downs after extending billions of dollars in leverage to the fund.

12.31pm BST

Time for some lunchtime reading (if that's matches your timezone!).

Hwang's most recent ascent can be pieced together from stocks dumped by banks in recent days -- ViacomCBS Inc., Discovery Inc. GSX Techedu Inc., Baidu Inc. -- all of which had soared this year, sometimes confounding traders who couldn't fathom why.

One part of Hwang's portfolio, which has been traded in blocks since Friday by Goldman Sachs Group Inc., Morgan Stanley and Wells Fargo & Co., was worth almost $40 billion last week. Bankers reckon that Archegos's net capital -- essentially Hwang's wealth -- had reached north of $10 billion. And as disposals keep emerging, estimates of his firm's total positions keep climbing: tens of billions, $50 billion, even more than $100 billion.

This has to be one of the single greatest losses of personal wealth in history."https://t.co/vSShe6j7bL

12.07pm BST

Here's the details of the jump in economic confidence in the EU and eurozone:

In March 2021, the Economic Sentiment Indicator improved sharply in both the EU (+6.9) and the euro area (+7.6).

The Employment Expectations Indicator also saw a forceful increase (+6.1 in the EU and +6.8 in the euro area).

https://t.co/S8kz2gluL1 pic.twitter.com/byNPAUoNs4

11.48am BST

Britain's business secretary insisted today that the UK steel industry still has a future, after the collapse of Greensill Capital, a key backer of Liberty Steel.

We are custodians of taxpayers' money, and there were concerns over the very opaque structure of the GFG Group and we feel that if we gave the money, there is no guarantee that that money would stay in the UK and protect British jobs. It's a multinational enterprise."

All options are on the table. We think the steel industry has a future in the UK. Only two weeks ago my department published an industrial decarbonisation strategy. We want to see clean steel ... of the kind Liberty Steel makes."

11.28am BST

Japan's Mitsubishi UFJ Securities may also suffer losses from the collapse of Archegos.

The brokerage arm of Mitsubishi UFJ Financial Group has flagged that it faces a potential loss of around $300m at its European subsidiary, related to an unnamed U.S. client.

Mitsubishi UFJ Securities Holdings said Tuesday it could face a $300 million loss in its dealings with a US client in what could be the latest deficit caused by last week's massive stocks sale.

The Japanese brokerage house, a unit of Mitsubishi UFJ Financial Group, said its European subsidiary was involved in an event" on March 26 that could lead to a financial loss.

Mitsubishi UFJ--the world's 5th largest bank--also stung by Archegos' unwind. Only $300m...so far. pic.twitter.com/FeVXusS3x6

11.00am BST

The eurozone's bounce in the economic confidence survey gives a much-needed positive signal.

Consumer and services confidence remain depressed. pic.twitter.com/eMmvuyBQPV

10.38am BST

Economic confidence across the European Union has hit its highest level since Covid-19 hit Europe early last year, as consumers and businesses express more optimism about future prospects.

The European Commission reports that economic sentiment and employment expectations are both sharply improving" this month, in both the EU and the euro area.

For the first time since the outbreak of COVID-19 on the continent, the ESI is back at (in the EU), or slightly above (in the Euro-Area), its long-term average.

Also the Employment Expectations Indicator (EEI) saw a forceful increase (+6.1 points to 98.0 in the EU and +6.8 points to 97.7 in the euro area), bringing the indicator in both regions close to its long-term average.

Amongst the largest EU economies, Germany stood out with the largest monthly improvement of its ESI on record (+7.9) and is currently the only of the big-6' countries where sentiment returned to above its long-term average.

The monthly increases in sentiment in the other big countries were nevertheless very significant, too: Spain (+6.2), France (+5.4), Italy (+4.9), the Netherlands (+4.4), Poland (+3.3).

10.15am BST

In Spain, retail sales and inflation have both risen.

Retail spending rose by 4.2% month-on-month in February, suggesting a pick-up in demand, although they were still 5.9% lower than a year ago (just before the pandemic).

Spain Retail Sales month-on-month at 4.2% https://t.co/7zYHxECuRj pic.twitter.com/ImEmrXY8BJ

Spain-February retail sales -5.9% y/y swda. Note this is the last month with a pre-covid reference point. March will produce a big positive reading. pic.twitter.com/1bstwGPoQE

Spanish HICP MoM Flash Actual 1.9% (Forecast 1.6%, Previous -0.6%) $MACRO

Spain Harmonised Inflation Rate month-on-month Prel at 1.9% https://t.co/JscH3n3QT6 pic.twitter.com/3ng8nz5JfF

9.53am BST

Global stocks rise as investors regain their focus on fundamentals after the Archegos fallout. Equities remain supported by an improving macro backdrop: recovery gain traction & earnings revision pos. Bonds plunge w/US 10y ylds jump to 1.75%. Gold down $1704. #Bitcoin rises 58.2k pic.twitter.com/TbCwcyxIkv

9.41am BST

The FTSE 100 index of blue-chip shares is holding its gains this morning, as investors shift out of bonds and into equities.

After around 90 minutes, it's up around 0.65% at 6779 points, lifted by economic optimism and hopes that the Archegos failure won't cause systemic problems.

US Treasuries care more about inflation than Archegos fallout, and they continue their fall.

US Treasuries gained yesterday morning as news of Archegos blow up hit the market. However, by the end of the day they reversed their losses showing that the market doesn't expect it to be a systematic event for the financial industry....

9.23am BST

Goldman snacks: bank sends hampers to staff amid inhumane' working hours

9.21am BST

UK funeral services firm Dignity has urged investors to vote against attempts by its largest shareholder to oust the chairman.

A fund managed by Phoenix Asset Management Partners, which owns 29.9% of Dignity, has asked for a shareholder meeting to vote on a proposal to remove Clive Whiley andreplace him with the chief investment officer and co-founder of Phoenix, Gary Channon.

9.10am BST

Good news from France -- consumer confidence has bounced back slightly this month, according to statistics body INSEE.

INSEE's guage of households' confidence in the economic situation has risen to 94 this month, up from 91 in February (but still below the long-term average).

In March, the share of households considering that the standard of living in France will improve in the next twelve months has bounced back sharply. The corresponding balance has gained sixteen points but is still far from its long-term average.

Households' fears about unemployment trend have decreased in March. The corresponding balance has lost eight points but stays well above its average.

French March Consumer Confidence Report - Inseehttps://t.co/sZrkhvcORc pic.twitter.com/wATSklqXiu

8.58am BST

Gold is also out of favour in this morning.

Bullion has dropped by nearly 1% to $1,697 per ounce, a three-week low.

8.48am BST

While shares rally, government bond prices are sliding this morning.

With investors anticipating a strong US recovery from the pandemic, they're selling bonds (which pushed up bond yields) and moving into riskier assets.

US 10yr at 1.755%. Basically the entirety of the strictly pandemic-related decline has been reversed. This is almost exactly where it was on January 23 last year when the Wuhan lockdown began. pic.twitter.com/yrjgmIo01k

The latest U.S. bond selloff was driven by news on Monday that those aged 30 and older would now be eligible for coronavirus vaccinations and expectations that President Joe Biden's infrastructure initiative, with a potential $3 trillion price tag, could further lift economic growth and debt issuance.

8.35am BST

In Frankfurt, Germany's DAX index has hit a fresh peak, as traders shrug off fears of a third wave of Covid-19 infections.

Germany's DAX hits fresh record high, up 0.7% pic.twitter.com/i72aAc3MHY

There are dangers lurking to undermine these month-end gains. As occurred when February came to a close, bond yields are on the rise. And though the markets have broadly made their peace with that in recent weeks, it could still cause a record high-imperilling wobble.

Similarly, just because markets appear to have moved on this morning, doesn't mean the dust has settled on Archegos Capital's collapse. That situation could still have some nasty surprises up its sleeve.

8.26am BST

Shares in Credit Suisse are also calmer today - they've crept up by 0.15% in early trading, after falling over 13% yesterday.

8.19am BST

Japanese bank Nomura had a quieter session today, with shares dipping by just 0.66%.

That adds to Monday's 16% slump, after it warned that it could have lost $2bn through transactions with a US clients (Archegos).

8.16am BST

In the short term, though, investors are looking past the Archegos crisis.

Stocks have opened higher in London, with the FTSE 100 jumping 47 points or 0.7% to 6783 points.

8.07am BST

The FT's Robin Wigglesworth has a handy explanation of why Archegos was able to build up large, highly leveraged positions in Chinese tech and US media companies, with the support of multiple lenders, without triggering attention (until it all blew up):

Historically, family offices have not had to register with the Securities and Exchange Commission because of an exemption for firms with 15 clients or fewer. The Dodd-Frank Act that tightened regulations in the wake of the 2008 financial crisis removed this exemption to shed more light on the hedge fund industry.

However, the SEC has let family offices decide for themselves whether they should be registered and file regular reports. A search for Archegos on the SEC's Edgar" reporting system yields pretty much nothing - itself eye-catching. Its use of financial derivatives known as swaps to build positions might have allowed it to circumvent reporting requirements on big stakes.

LTCM was far bigger, more woven into the fabric of several systemically important markets. The Archegos losses will be humiliating to many banks, and in some cases ruin their financial year, but they are much better capitalised since 2008.

A must read - @RobinWigg on how Archegos managed to rack up such massive positions:

"In truth, it seems more like a Reddit day trader got access to a Goldman Sachs credit card and went bananas."https://t.co/MamYl6X0lH

7.58am BST

The full consequences from the collapse of Archegos will probably take a few weeks to fully play out, points out my colleague Nils Pratley:

As things stand today, the whacks to Credit Suisse and Nomura, whose shares fell sharply, are mainly of concern to their own investors. Hedge funds collapse occasionally. The worry, though, is that this example of stupid risk-taking - on the part of Bill Hwang's Archegos and the lenders - is a sign of wider delusional thinking. ViacomCBS's shares, note, had trebled in three months and the specific problem began only when the company tried to raise fresh capital at the higher level. It rather suggests nobody truly believed in the rally.

Markets were calmer than expected on Monday and, for now, the theory that Archegos is a one-off is intact. But let's see what the next few weeks brings as every big investment bank in the world checks its hedge fund exposures. Stock markets are displaying pockets of extreme valuations, at least by historical standards. If some banks' risk-control departments have been asleep, there is potential for trouble.

7.33am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

This is a challenging time for the family office of Archegos Capital Management, our partners and employees.

All plans are being discussed as Mr. Hwang and the team determine the best path forward."

The most severe impact was actually experienced by non-US banks, with Nomura (-16.33%) seeing its largest daily move lower ever and Credit Suisse (-13.83%) experiencing its worst performance in over a year,

#Archegos #MarginCall fallout, chart @BloombergTV https://t.co/YOyJSve2UM pic.twitter.com/2r3KR2DCF2

Market commentary remains fixated on the drama surrounding the collapse of Archegos Capital Management in the US, as market participants attempt to pick apart the impacts of the failure and the potential for greater financial contagion.

For all the concern however, for the time being, other than some localized pain in some major financial stocks, especially in Japan, where that country's equities have struggled in the face of the episode, risks on a systemic scale still appear to be low.

If I ever have a family office worth billions I'm going to live by this motto: never risk what you have for something you don't need". Why risk billions like that?

*#TREASURY 10-YEAR YIELD RISES TO 1.75%, HIGHEST SINCE JAN. 2020 - BBG
*TREASURY 2/10-YEAR YIELD SPREAD WIDENS TO MOST SINCE JULY 2015

Source	RSS or Atom Feed
Feed Location	http://feeds.theguardian.com/theguardian/business/economics/rss
Feed Title
Feed Link	http://feeds.theguardian.com/