Overview of TOP weekly news 3.3.2021

03 / 03 / 2021
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EU inflation below target

Data capturing year-on-year inflation in the euro area rose unchanged in February to 0.9 percent, according to Eurostat. The euro area has finally emerged from deflation after 5 months of steady decline and is growing for the second month in a row.

Among euro area countries, inflation fell the most in February in Greece, where deflation was 1.9 percent. By contrast, inflation grew the fastest in the Netherlands (1.9 percent) and in Germany (1.6 percent).

Last year, the ECB took a series of emergency measures to support inflation and the economy to recover from the negative effects of the crisis by spreading of coronavirus. Although the bank left monetary policy unchanged in January, it indicated the possibility of stimulus measures in the future, as the outlook is deteriorating due to the spreading of the covid-19 pandemic and inflation still below the 2% target.

Which EU country will be the first to raise interest rates?

According to a Bloomberg survey, the Czech Republic would be the first country within the EU to raise rates. * The first could happen this summer. Back in November 2019, according to Bloomberg, traders bet on rate cuts. Looking at the other V4 countries, Poland and Hungary, raising credit rates is still a more distant project. Both countries rely on quantitative easing, which also applies to the euro area.

The latest forecasts of the Czech central bank predict a greater tightening of policy than the money markets themselves. The first increase is expected around the middle of this year due to reliance on the pace of vaccination and economic recovery as well as exchange rate developments.

The Czech Republic is currently one of the toughest lockdowns. The country has more vacancies than unemployed. This is also the main reason why consumer price inflation has been running above the 2% inflation target for two years.

Is raising the US minimum wage realistic?

Democrats plan to raise the minimum wage from $7.25 to $15. Approval in Congress is not yet certain. If the Democrats proposal passes, the financial perspective of social security trust funds, which face a solvency problem around 2034, will improve. Another positive impact would be the improvement of retirement prospects for millions of people with low wages. *

Democrats are advocating an increase in the minimum wage through inequality in the pension environment and a significant racial gap in retirement wealth. Analyzes of Federal Reserve data compiled by the Joint Center for Housing Studies at Harvard University captured the net wealth of domestic capital in 2019. The median net wealth of white households over 65 was $326,170, compared to only $75,190 for black households and $63,560 for Latin Americans.

OPEC expects inventory reductions

The OPEC expects oil inventories to fall by around 400 million barrels in 2021. OPEC expects the outlook for the oil market, in general, to be positive and the uncertainty that dominated last year is easing, the group’s secretary-general said. The main reason is the return to a healthy balance of supply and demand in 2021. *


Performance of futures Brent oil (Source of the graph: Tradingview) [1]  

Facebook will pay for the content in Australia

After the Australian government approved the payment of messages posted on Facebook, Facebook responded by blocking messages. The government responded with concessions from the government and agreed to relax a new law that effectively requires payments in exchange for a social media company.

Performance of Facebook’ shares (Source of the graph: Tradingview) [2]

Watch this week:

Thursday, March 4, 2021

The US will publish the development of initial jobless claims. Expectations are 750,000 new applications. *

Friday, March 5, 2021

Germany will publish the development of factory orders in January. The 0.7% growth is expected on a year-on-year base. *

The US will publish employment performance in February. Analysts expect an unchanged level of employment of 6.3%. *

Source of the text: Investing, Zerohedge, Financial Times, Reuters, Tradingview

[1,2] Past performance is no guarantee of future results

*     Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or based on the current economic environment which is subject to change. Such statements are not guaranteeing future performance. They involve risks and other uncertainties which are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.

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