* European shares up 0.8%
* U.S. Senate passes $1.9 trln stimulus, set to be signed in
days
* Brent May futures and WTI April contract up more than 2%
March 8 - Welcome to the home for real-time coverage of
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ECB: HOW MUCH PEPP DOES IT TAKE? (1101 GMT)
Some analysts argue that the ECB should increase the PEPP
pace in order not to lose credibility on yields control.
But the issue here is how much more government bond purchase
would it actually take to reassure investors?
Economists at TS Lombard say “the bar for the ECB to prove
its real commitment is an acceleration in the pace of PEPP net
purchases above €20bn/week.”
Unicredit, which advocates more purchase by the ECB, sees a
20-25bn range this week.
“Weekly PEPP flows will then stabilize above EUR 20bn for
some time, and at least until the market gets the message
right,” it says.
“Clients expecting faster weekly purchases (20bn+) at a
minimum to reduce rates for a region still seeing rises in COVID
cases,” UBS says.
Nomura which expects the ECB to step up the pace of its PEPP
purchases, recalls that this number “have been averaging less
than €16bn per week since the start of 2021, almost half of the
weekly pace at the height of the pandemic in spring 2020.”
But “prolonged effort however could renew the discussion
about the adequate size of the envelope,” ING economists argue
(see chart below).
Few analysts believe the ECB will look for something bigger
in its arsenal to fight the rise in yields.
"The nuclear option would be to increase again the PEPP’s
envelope", wrote Gilles Moëc, chief economist at AXA Investment
Managers.
"We don’t think there is a pressing need to do so", he says.
Today the ECB will release data of its QE programme,
including its Pandemic Emergency Purchase Programme (PEPP).
(Stefano Rebaudo and Julien Ponthus)
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OPENING SNAPSHOT: ALL TOP EUROPEAN INDICES IN THE BLACK
(0900 GMT)
European shares kick off the week in positive territory
after the U.S. Senate passage of a $1.9 trillion stimulus bill
and a jump in oil prices that helped major European energy
companies.
The stimulus passage fuelled hopes for a global economic
recovery pushing the pan-European index up 0.7% with big
COVID-19 laggards like cruise operator Carnival leading
the pack, up around 6%.
The European banking sector hit fresh one-year high, up
2.5%.
Brent crude futures rose above $70 a barrel for the first
time since the COVID-19 pandemic began helping the oil sector
to gain almost 1%.
Here is your morning snapshot with all top bourses across
Europe trading in the black:
(Joice Alves)
*****
MORNING BID: ON STOCK MARKETS, $3.5 TRILLION AND COUNTING
(0805 GMT)
Ten-year U.S. Treasury yields have risen for six weeks
straight, their longest rising streak in eight years. But the
Fed, clearly seeing higher borrowing costs as commensurate with
economic recovery, has essentially declined any action. So with
President Joe Biden's $1.9 trillion spending package getting the
nod from Congress, Treasury yields are on the rise again and
Wall Street is gearing up for another hit.
The yield-sensitive grouping of FAANG plus Tesla and
Microsoft has lost $760 billion in value since mid-February and
futures for the tech-heavy Nasdaq index are already down 1.5% on
Monday. Asian stocks ended on a weak note though Europe's
tech-lite bourses might prove more resilient.
But rising yields are tightening euro zone financial
conditions too. Much of it stems from exogenous factors though
there are signs of domestic improvement too; Germany's Ifo
institute said on Monday manufacturing sector sentiment improved
for the third month in a row.
So the ECB's Thursday meeting has taken on more urgency;
indeed some officials such as Fabio Panetta have effectively
called for yield curve control to be adopted. We also find out
later on Monday whether the ECB stepped up bond-buying last week
under its PEPP emergency stimulus scheme to slow the yield rise.
European policymakers may be relieved however by the
dollar's recovery against the euro; the greenback is at
three-month highs, as rising real yields and economic recovery.
But signs of economic recovery -- and possibly inflation --
are everywhere; after Friday's forecast-beating U.S. payrolls
figure, even Japan reported a sharp rise in its so-called
economy watchers' index. Oil prices have vaulted above $70
(partly driven by Yemeni rebels' drone attack on Saudi
production facilities)
Yields may have nowhere to go but up if data stays robust
and central banks stay shtum.
Key developments that should provide more direction to markets
on Monday
- U.S. crowd-safety company Evolv Technology is combining with
NewHold Investment SPAC to go public in a deal valuing it at
$1.7 billion.
-UBS begins appeal against 4.5 billion-euro penalty levied by a
French court for allegedly helping clients stash undeclared
assets offshore.
-Norwegian holding company Aker is establishing a unit to invest
in bitcoin and blockchain
-BOE Governor Andrew Bailey speaks 1000 GMT
(Sujata Rao)
*****
BREAKFAST MIX: U.S. STIMULUS, CHINA, OIL SURGES (0633 GMT)
European shares are seen on the rise as traders expect
global growth to accelerate after the U.S. Senate passage of a
$1.9 trillion stimulus bill.
Upbeat economic data came also from China, which reported
February exports in dollar terms skyrocketed 154.9% in February
compared with a year earlier.
Capping the optimism, analysts also expect a sharp
acceleration in inflation, stoked in part by the latest spike in
oil prices, which is pushing up bond yields.
Brent crude futures surged above $70 a barrel for the first
time since the COVID-19 pandemic began, while U.S. crude touched
its highest in more than two years, following reports of attacks
on Saudi Arabian facilities.
Financial spreadbetters at IG expect London's FTSE to open
46 points higher at 6,676, Frankfurt's DAX to open 66 points
higher at 13,987 and Paris' CAC to open 39 points higher at
5,821.
(Joice Alves)
*****