The market now expects the ECB to raise its key rate at the highest level ever!
As reflected in the European swap market, market participants expect the ECB to raise its key interest rates to a level never before seen. The terminal rate is expected to be close to 4%, up from 3.75% in the early 2000s. Interestingly, for the first time in this cycle, the markets believe that the terminal rate will be reached in 2024 (and not in 2023). Higher rates for longer? Source: Bloomberg.
The average price of a new home sold in the US is down 16% from its peak last July
After the last housing bubble peak the average new home price fell 25% nationally. Source: Charlie Bilello
Germany is still far from its energy transition goals
Germany must invest $1tn in expansion of renewable energy by 2030 in order to cover 80% of its electricity needs from renewable sources by then. Germany needs 43 soccer fields of solar power every day, boldest project since WWII. Source: Bloomberg, HolgerZ
Eurozone inflation for January tops earlier estimate
Eurozone CPI rose 8.6% in Jan YoY, up from 8.5% increase prev estimated. Core CPI, which strips out volatile categories, was 5.3%, up from preliminary estimate of 5.2% and fresh ATH. Core gives ECB hawks new fuel for more hikes.
Fed Terminal Rate has climbed 50bps year-to-date and keeps rising
This is the chart that is rattling the markets: Fed Terminal Rate has climbed 50bps year-to-date and keeps rising!
German Food CPI jumped 20.2% YoY in January
Supermarket inflation remains elevated in Gernmany. Food CPI jumped 20.2% YoY in January. Following the rebalancing of the basket of goods by German Statistics Office, food now has a higher weight in inflation rate. Share rose by 2ppts from 8.5% to 10.5%. Source: HolgerZ, Bloomberg
Japan’s Key Yield Rises Above 0.5% BOJ Ceiling for Second Day
Source: Bloomberg
China ramps up cash injection to prevent funding stress
The People’s Bank of China offered 835 billion yuan ($121 billion) of cash via seven-day reverse repurchase contracts on Friday, resulting in an injection of 632 billion yuan on a net basis. That’s the largest one-day addition on record in data going back to 2004 - Sources: C.Barraud, Bloomberg
