Sentiment in the euro area is improving
Investor’s sentiment is improving so outlook of the eurozone’s economic recovery is rising. This is indicated by the investor confidence index, which climbed to its highest level in almost a year in January due to optimism about the covid-19 vaccination. The Sentix survey rose to 1.3 from -2.7 points in December in January. Analysts in the Reuters survey predicted a slight increase in the index, to just 0.7 points.
“The aggregate index entered positive territory for the first time since last February at the beginning of the year. Investors are ignoring current lockdowns and fully relying on a successful vaccination strategy,” said Sentix.
“Now that more vaccines have been approved, investors clearly expect a rapid implementation of the vaccination strategy, and thus a definitive end to restrictions on economic and personal freedom,” Sentix said.
The World Bank’s outlook predicted that the euro area’s gross domestic product (GDP) would increase by 3.6 per cent this year after the third economic power fell by 7.4 per cent last year.
What to expect from central banks?
According to the French investment bank Natixis, inflation may rise, pushing yields up, but not in the foreseeable future. The longer-term outlook of the bank is that yields should keep yields low in excess of global savings over demand for savings. So, bond rates and yields will remain lower even after central banks stop buying government bonds.
If inflation were to rise, it would lift the opening of the economy and release previously accumulated savings into the demand wave, although this scenario is unlikely. The pressures are high unemployment as well as rising asset prices and thus the wealth of a limited part of society.
If there is no economic recovery in the first half of 2021, according to the bank, there will still be a lot of unused production capacity on the labour market and inflation will remain low. The ECB’s government deficit increased by bond purchases will be high, and if it continues to extend purchases in March this year, Natixis predicts that its decision-making will be difficult in that the bank will have to wait for Fed action to prevent a possible sharp appreciation of the euro.
Gas prices are skyrocketing
While the price of LNG gas reached unprecedented lows in spring 2020, we can now see growing demand due to frosts in Europe and Asia. Europe supplies gas thanks to a well-developed cross-border pipeline infrastructure with suppliers from Russia, North Africa, and the Caspian Sea. However, Asia is more dependent on LNG gas. The top three largest importers of LNG gas are therefore Japan, China, and South Korea.
However, the LNG market remains highly volatile, especially as the economic consequences of the pandemic are still uncertain. For now, however, it is uncertain whether LNG gas prices will remain high in the long run. Even though the vaccine predicts the end of the economic crisis thanks to the vaccine, it may take years for the economy and demand for LNG to be as it was before the pandemic.
Deutsche Bank will no longer trade with Trump
Deutsche Bank has announced that it will not trade with US President Donald Trump or his companies in the future following an attack by his supporters on January 6. It is a painful hit for Donald Trump’s empire, as Deutsche Bank is the most important lender to his organization, worth about $340 million.
Performance of Deutsche Bank’s shares (Source of the graph: Tradingview)
PayPal has blocked the crowdfunding page
PayPal announced the blockade of Christian crowdfunding’s site after helping raise funds for people who attended last week’s event in Washington. Online platforms and social networking companies have united to break into the Capitol and distance themselves from those who have joined it.
Performance of PayPal’s shares (Source of the graph: Tradingview)
Watch this week:
Thursday, January 14, 2021
Germany will publish the performance of the GDP forecast on the quarter-over-quarter base. In the third quarter, the economy grew by 8.5%.
The US will publish initial applications for unemployment. New applications are expected to decrease by 7 thousand to 780 thousand.
Friday, January 15, 2021
The United Kingdom shall publish the production. 0.9% month-on-month growth is expected in November.
Source of the text: Investing, Zerohedge, Financial Times, Reuters, Tradingview