Market researcher Markit reports that delivery times for British companies increased unprecedentedly in January because of the Brexit and corona measures. Except for April 2020, when many factories were closed, Markit says this is the largest delay in deliveries since the measurements started 30 years ago. Despite the trade deal between the United Kingdom and the European Union, carriers at the border have to deal with a lot more paperwork due to Brexit. In addition, anyone traveling from Great Britain to France must show a negative corona test.
China last year ousted the United States as the world’s number one attracting the most foreign investment. Foreign direct investment inflows into China reached $ 163 billion last year. US investment capital inflows were $ 134 billion last year. The United Nations Conference on Trade and Development (UNCTAD) notes this in a report released on Sunday.
Germany has significantly lowered its forecast for economic growth this year. The largest economy in Europe expects 3 percent growth, while the previous estimate in October was an increase of 4.4 percent for 2021.
The 6M Euribor is unchanged at -0.53% compared to previous business day. The 10Y Swap decreased with 1 basis point to -0.20% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
The European Central Bank (ECB) decided on Thursday to leave its monetary policy unchanged. In December 2020, the ECB decided to extend the buy-back program by 9 months and to increase it by EUR 500 billion. For the time being, these measures are sufficient to maintain financing conditions for businesses and households, but the ECB is ready to adjust its policy if necessary. Analysts also expected an unchanged policy.
Consumer confidence in the eurozone declined further in January 2021 compared to December 2020. The index was negative 15.5 in January 2021, from negative 13.9 a month earlier. This follows from figures published by the European Commission on Thursday.
The prices of existing owner-occupied homes in the Netherlands increased by 8.3 percent in December 2020 compared to December 2019, according to figures from Statistics Netherlands on Friday. In November 2020, prices increased with 8.9 percent on an annual basis. Over the year 2020, the prices of owner-occupied homes increased by 7.8 percent compared to 2019.
The 6M Euribor is unchanged at -0.53% compared to previous business day. The 10Y Swap increased with 3 basis points to -0.19% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
Based on preliminary figures from Eurostat, Eurozone inflation was again recorded at -0.3% for the fourth consecutive month in December. Core inflation, which excludes highly volatile energy prices, did remain positive at 0.2%, the same as in November of last year. Over that period, Greece saw the sharpest decline at -2.4% and Poland the sharpest increase at 3.4%. Inflation in the Netherlands in December 2020 is estimated at 0.9%, well above the Eurozone average.
China’s Belt and Road Initiative appears to be under pressure. The project is intended to further boost global trade with China and it should secure the supply of raw materials to China. This is achieved by providing, mostly developing countries, with favorable loans for the construction of major infrastructure projects. However, recent research by Boston University showed that investments by Chinese state-owned banks between 2016 and 2019 already dropped from USD 75 billion to USD 4.9 billion. In addition, analysts at Rhodium Group estimate that in 2020 the principal payments of about a quarter of all outstanding Chinese loans will be delayed. It is expected that this will continue to increase due to the ongoing corona pandemic.
In 2026, the Netherlands will transition into a new pension system. The board members of two of the Netherlands’ largest pension funds, ABP and PMT, are warning that different rules must be put in place quickly for the transition period. In an interview in Algemeen Dagblad, Corien Wortmann (ABP) and Terry Troost (PMT) accuse Minister Koolmees of Social Affairs of being too optimistic about the impact of the transition on pensions. The board members also call on the minister to amend the rules on the actuarial interest rate and the coverage ratio quickly, otherwise they fear that many pensions will have to be cut.
The 6M Euribor is unchanged at -0.53% compared to previous business day. The 10Y Swap is unchanged at -0.22% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
The confidence of German investors in the future increased sharply in January, according to research institute ZEW. Expectations for exports in particular boosted confidence. Economists expected the index to reach a level of 60, but the index increased to a level of 61.8 from a level of 55 a month earlier. The index measuring confidence in the current situation was still negative with a position of minus 66.4 against minus 66.5 in December. According to the ZEW, expectations for the Eurozone economy also improved in January, with a level of 58.3 from 54.4 in December.
The economic recovery from the corona crisis seems to start sooner than foreseen in large European countries such as Germany and France, according to the International Monetary Fund (IMF). The IMF has revised its forecasts for the largest eurozone economies. The German economy shrank 5.4% last year, and is likely to pick up 3.5% in 2021, according to new estimates. In France, the crisis shrank by 9% last year, this year 5.5% growth is expected.
Janet Yellen, the first female treasury secretary in the United States, if her nomination is approved, appeared in the Senate before a special committee on Tuesday. Her testimony made it clear that she is breaking with the Trump administration on many points. She called climate change and other environmental issues an “existential threat” to the US economy. A pre-published statement stated that Yellen is in favour of new support measures to mitigate the economic consequences of the corona crisis. Last week, Biden presented a plan for a $ 1.9 trillion corona support package.
The 6M Euribor is unchanged at -0.53% compared to previous business day. The 10Y Swap increased with 1 basis point to -0.22% compared to previous business day.
The risk of a slowdown in the eurozone economic recovery increased as the corona crisis continues with new variants of the virus. Nevertheless, the finance ministers of the 19 eurozone countries (Eurogroup) agree that supportive fiscal policies for citizens and businesses remain necessary. The ministers discussed the recovery plans which they will submit to Brussels in the second half of February. In three months’ time, approvals are scheduled in order to allocate funds from the EUR 672.5 billion recovery fund.
Dutch exports continue to be hampered by the Corona crisis and lockdown. According to the monthly Corona Monitor by entrepreneurial association evofenedex and credit insurer Atradius, 52% of exporting companies were affected by the crisis in December. 13% of the companies were able to achieve growth. Compared to December 2019, turnover decreased with 21%.
Sales of new passenger cars in the European Union decreased by almost a quarter last year due to the corona crisis. According to the European industry association ACEA, sales decreased again in December, the decrease was lower than in the previous months. In December 2020, sales decrease with 3% than in the same month last year. During 2020, over 9.9 million cars were registered. In 2019, 13 million vehicles were registered.
The 6M Euribor is unchanged at -0.53% compared to previous business day. The 10Y Swap increased with 1 basis point to -0.23% compared to previous business day.
The Italian government is anticipating a higher budget deficit and national debt than previously expected. According to new figures, the national debt will amount to 158.5 percent of the gross domestic product (GDP) this year, against 155.6 percent last year. The budget deficit is anticipated to be 8.8 percent of GDP this year.
The national statistics office in Beijing reports that the Chinese economy grew by 2.3 percent last year. China is the only large country to report growth in the corona year 2020. China’s gross domestic product increased by 6.5 percent in the fourth quarter of 2020 compared to the same period a year earlier. In the third quarter, the economy grew by 4.9 percent.
The strong rise of bitcoin seems to have come to an end for the time being. According to data from Coinmarketcap, yesterday the digital currency was worth as much as it was in the first week of January. A week and a half ago, the crypto coin reached an absolute record level of more than $ 41,000, thereafter the bitcoin fell sharply, to around $ 31,000.
The 6M Euribor is unchanged at -0.53% compared to previous business day. The 10Y Swap is unchanged at -0.24% compared to previous business day.
President-to-be of the United States, Joe Biden, announced a $1,900 bn bailout package to combat the effects of the corona pandemic. The support package is intended, among other things, to increase the minimum wage and the existing support checks. The package has yet to be approved by the US Congress after the upcoming inauguration.
The German statistical office announced on Thursday that the German economy contracted by 5.0 percent in 2020 compared to 2019. Economists had expected a contraction of 5.1 percent. In 2019, Germany saw a slight growth of the economy of 0.6 percent. The last contraction of the German economy took place in 2009. In that year, the gross domestic product in Germany decreased by 5.7 percent.
Import prices in the United States increased by 0.9 percent in December 2020 compared to November 2020. Economists expected an increase of 0.7 percent in advance. In November 2020, there was also an increase of 0.2 percent in import prizes on a monthly basis. This follows from figures published by the US Department of Labor on Thursday. US export prices increased by 1.1 percent in December 2020 compared to November 2020.
The 6M Euribor is unchanged at -0.53% compared to previous business day. The 10Y Swap decreased with 1 basis point to -0.24% compared to previous business day.
The Netherlands could be entitled to a claim of EUR 757.4 million to be paid by the European Union, as a compensation for the negative consequences of the Brexit. Ireland is expected to receive more, based on the proposal that the EU countries and the European Parliament are negotiating. The Brexit fund amounts to a total of EUR 4.24 billion. The distribution by member states was discussed for the first time on Wednesday. There was no consensus yet, so the European Parliament will re-examine this distribution.
The Eurozone industry recovered further in November, based on figures from the European statistics agency Eurostat. Industrial production increased by 2.5% compared to October. The increase was mainly due to the production of capital goods. In October production increased by 2.3%, on a monthly basis. The impact of the new lockdowns will probably have a negative effect on industrial activity of many European countries.
The corona crisis has clear consequences for the rental market, according to a report by housing platform Pararius. Due to the absence of foreign employees, rents for furnished and semi-furnished houses in the private sector have decreased. New tenants paid EUR 16.16 per square meter per month in the fourth quarter of 2020. This is 3.7% less than in the same quarter in 2019. The price decreases are particularly evident in the major cities. Prices decreased in Amsterdam (-6.8%), Rotterdam (-4.8%), The Hague (-3.1%) and Eindhoven (-2.9%).
The 6M Euribor decreased with 1 basis point to -0.53% compared to previous business day. The 10Y Swap decreased with 5 basis points to -0.23% compared to previous business day.
According to forecasts by news agency Bloomberg, the euro area economy will contract by 4.1% in the first quarter of 2021, while economists previously forecast an increase of 1.3%. The amended forecast is based upon the recently announced lockdowns to mitigate the corona virus. The vaccinations and a softening of the lockdowns could lead to growth again in the remaining quarters of the year. In that scenario, economist expect potential growth of 4.8% for the second quarter and 3.1% for the third quarter 2021.
Households in the eurozone are still saving a substantial part of income because of the corona pandemic. This is reported by the European statistical office Eurostat. The so-called savings rate, the portion of net income that is put into savings accounts, amounted to more than 17% in the eurozone in the third quarter. That is significantly less than in the second quarter when the savings rate was almost 25%. In previous years, the indicator was 12% on average.
The United Kingdom’s economy is facing “dark times” due to the strongly increasing number of corona infections in the country and the new lockdowns according to Governor Andrew Bailey of the Bank of England (BoE). Bailey also said that recovery is in sight with the rollout of vaccines, but that the coming months will be difficult. Many economists now assume that the UK economy will contract in the first quarter of 2021.
The 6M Euribor increased with 1 basis point to -0.52% compared to previous business day. The 10Y Swap increased with 3 basis points to -0.18% compared to previous business day.
Economic recovery in the euro area will be slow, unequal and fragile, credit rating agency Moody’s warns. Moody’s assesses the euro area’s economic forecast as negative. As a result, the euro area as a whole is likely to suffer a loss of creditworthiness in the long run. Moody’s forecasts a rebound in economic growth this year to 4.6% in 2021, after an expected contraction of 7.7% last year. Credit risks are highest in Italy, Cyprus, Spain and Portugal, given their high economic exposure to the crisis and their more limited fiscal space.
The UK has become less attractive for family businesses. As a result of the brexit the UK remains in a reasonably good position compared to other countries and places second, only surpassed by the US. This has been shown by a study carried out by the research institute ZEW (Centre for European Economic Research) on family businesses and which country has the best conditions for them to set up a business.
Consumer prices in the Netherlands increased by 1.3% on average in 2020 compared to 2.6% in 2019. This is according to figures from Statistics Netherlands (CBS). Despite the decrease in inflation, the price increase in the Netherlands in the past year was once again one of the highest in the eurozone.
The 6M Euribor decreased with 1 basis point to -0.53% compared to previous business day. The 10Y Swap increased with 2 basis points to -0.21% compared to previous business day.
The planned increase in British taxes is reportedly being postponed. According to the British newspaper The Times, the increases are not expected before next summer, as British Chancellor of the Exchequer Rishi Sunak fears the economic consequences of the corona pandemic.
Employment in the United States unexpectedly declined in December. According to the US Department of Labor, this is the first job decline since last spring’s major corona blow. In total, excluding agriculture, 140,000 jobs were lost, while economists expected about 50,000 extra jobs. In addition, business newspaper The Wall Street Journal reported that last year job losses in the United States were at their highest levels since 1939.
President-elect Joe Biden wants to allocate trillions of dollars for additional support to help guide the US economy through the corona crisis. According to Biden, the disappointing US job market shows the need for further aid measures for households in the United States. Biden believes that more immediate household support is needed soon, including a $ 2,000 support check.
The 6M Euribor increased with 1 basis point to -0.52% compared to previous business day. The 10Y Swap is unchanged at -0.23% compared to previous business day.
Eurozone retail sales decreased by 6.1 percent, measured by volume, in November 2020 compared to October 2020. In October 2020 retail sales increased with 1.4 percent compared to September 2020. This follows from figures published by the European statistics agency Eurostat on Thursday. On an annual basis, sales decreased by 2.9 percent in November 2020.
The purchasing managers index for the services sector in the United States unexpectedly increased in December 2020 to 57.2, from 55.9 in November 2020. This was shown Thursday by figures from the Institute for Supply Management. Analysts had expected a decrease to 54.5.
Figures from statistics Netherlands on Friday show that the production in the Dutch industry decreased by 2.5 percent in November 2020 compared to November 2019. In October 2020 and September 2020, production also decreased by 3.6 percent and 6.6 percent respectively. On a monthly basis, production decreased by 0.2 percent in November 2020 compared to October 2020.
The 6M Euribor decreased with 1 basis point to -0.53% compared to previous business day. The 10Y Swap increased with 2 basis points to -0.23% compared to previous business day.
Employees covered by a collective labor agreement (CLA) have seen their wages increase the most in twelve years in 2020, based on figures from Statistics Netherlands (CBS). This is not consistent with corona crisis, however, agreements on wage increases had already been concluded for almost three-quarters of all collective labor agreements as per the beginning of 2020 (prior to the outbreak). For the three CLA sectors, wages in the government increased most, at 3.2%. Wages increased the least at 2.7% at subsidized institutions.
The European Commission will invest EUR 178 million in shares and grants to 42 European start-ups. It is the first time that the day-to-day EU management takes stakes in commercial enterprises. This concerns an investment between EUR 500,000 and EUR 15 million per company. With the investment program, Brussels wants to help young European technology companies develop faster and attract traditional investors.
Industries such as retail, hospitality, aviation and tourism are severely affected by strict corona measures in many European countries. According to British market researcher Markit, activity in the eurozone services sector declined more sharply in December than expected. The services sector in the eurozone thus shrank for four months in a row. The purchasing managers index for the euro countries was 46.4.
The 6M Euribor increased with 1 basis point to -0.52% compared to previous business day. The 10Y Swap increased with 2 basis points to -0.25% compared to previous business day.
The number of unemployed in Germany turned out lower than expected in December. On a monthly basis unemployed decreased with 37,000 to almost 2.8 million. Economists had anticipated a slight increase in the number of unemployed. The German unemployment rate remained stable in December at 6.1 % of the labor force.
The world economy could grow by 4 % in 2021, after a contraction of 4.3 % in 2020 according to the World Bank. The institute emphasizes the risks of further rising of corona infections and delays in the roll-out of vaccines. In that scenario, the growth of the global economy would be limited to 1.6 % this year. In the scenario that the pandemic is under control quickly, growth could reach nearly 5 %, the World Bank reports.
Saudi Arabia will voluntarily cut its oil production by 1 million barrels per day in February and March to support the oil market during the corona crisis. Allies Russia and Kazakhstan are allowed to increase their production. The agreement provides Russia the desired extra oil production and Saudi Arabia the intended price stability. The deal was reached after two days of negotiations and caused oil prices to rise on Tuesday. The production of other OPEC + countries remains virtually unchanged.
The 6M Euribor is unchanged at -0.53% compared to previous business day. The 10Y Swap increased with 2 basis points to -0.27% compared to previous business day.
The United States has intensified its sanctions against companies and investors involved in the construction of the Nord Stream 2 gas pipeline, which runs from Russia to Germany. The US opposes the pipeline as it would give Russia more influence in Western Europe, according to the US. The US sanctions include fines for companies providing technical certificates and insurance for the gas pipeline.
Iraq increased its oil production in December. The country, which is a leading member of oil cartel OPEC, may have violated agreements on production restrictions to support prices together with other OPEC countries such as Saudi Arabia and allies including Russia (OPEC+). According to tanker data and port reports analyzed by press bureau Bloomberg, Iraq would have produced 4% more oil last month. This indicates that Iraq has failed to comply with agreements on production restrictions.
Industrial activity in the euro area reached its highest level in December since May 2018, showing further recovery from the corona crisis. This was reported by UK market researcher Markit on the basis of its purchasing managers index reflecting activity. According to Markit, the indicator came out at a final level of 55.2, compated to 53.8 in November.
The 6M Euribor decreased with 1 basis point to -0.53% compared to previous business day. The 10Y Swap decreased with 3 basis points to -0.29% compared to previous business day.
Oil prices increased on Monday for the fourth day in a row ahead of the meeting of oil cartel OPEC and allies like Russia (OPEC +). Today the OPEC + will detemine whether production restrictions will be extended.
The president of De Nederlandsche Bank, Klaas Knot, cautions the cabinet to refrain from reducing budgets too soon, as the economy must first recover from the corona pandemic. “Only when the economy is back to its old level, should the government do something about the deficit,” he said in an interview in the Dutch newspaper AD. He believes that the government should continue to pursue the support policy until the virus is under control.
The digital currency bitcoin has risen above $ 30,000 for the first time on Saturday. The strong increase of the crypto currency value does not seem to be coming to an end for the time being. After reaching the milestone, the value of the coin continued to increase almost immediately.
The 6M Euribor is unchanged at -0.52% compared to previous business day. The 10Y Swap is unchanged at -0.26% compared to previous business day.