UK mortgage approvals declined to 71,000 in February from 73,800 the previous month and below consensus forecasts of around 74,000. Although there was a slowdown in the rate of growth in mortgage lending, there was a much stronger increase in consumer credit growth for the month with a higher overall increase in consumer borrowing. The data failed to provide Sterling support as confidence in the economic outlook remained fragile. Sterling recovered against the dollar as Ukraine peace hopes trigger sharp dollar losses. Selling on rallies was again a key feature as markets continued to doubt the willingness of the Bank of England to raise interest rates substantially further. BRC data recorded a 2.1% increase in shop prices in the year to March from 1.8% previously and the largest increase for over 10 years.
9.10 Bank of England Broadbent Speech
German consumer confidence dipped further to -15.5 for March from -8.5 previously and below consensus forecasts of -14.5. After inching higher, the Euro posted significant gains after comments from Russian officials that the peace talks with Ukraine had been constructive. Ukraine officials also adopted a more positive stance with comments that enough ground had been made to hold a meeting between President Zelensky and Russian President Putin. The Euro then jumped higher following Russian comments that it will scale back military activity around Kyiv and Chernihiv. There was a shift in ECB expectations with markets pricing in 67 basis points of tightening by the end of this year. ECB council member Holzmann stated that raising the deposit rate to zero this year is critical as failure to act would increase the risk that sharper rate increases would be required next year. He added that the central bank may still be under-estimating inflation. Comments from chief economist Lane were more dovish as he expects inflation will decline this year and be much lower next year. Given inflation concerns, the German CPI inflation data will be watched closely on Wednesday. The Euro edged lower later in the day following comments from Russia; top negotiator that de-escalation did not mean a cease-fire. There were also still concerns over energy supplies, especially with Russia setting a deadline for March 31st for payment of gas supplies to be paid for in roubles.
9.00 Christine Lagarde Speech
13.00 German Harmonized Index of Consumer Prices (YoY) (Mar) Exp. 6.7% Prev. 5.5%
US consumer confidence strengthened to 107.2 for March from a revised 105.7 previously and marginally above consensus forecasts of 107.0. There was a significant improvement in the current conditions index with increased optimism over the labour market, but a net decline in the expectations component for the month. The JOLTS job-openings data registered little changed at 11.27mn for February from 11.28mn previously and remaining close to record highs. Philadelphia Fed President Harker stated that interest rate hikes need to be deliberate and methodical to a neutral rate of 2.5%. He noted that supply-chain pressures are starting to ease, but that there is the risk of sharp upward prices in the services sector. He added that he would not take 50 basis-point hikes off the table, but was not committed to them either. Following the comments there was a further flattening of the yield curve. There were less hawkish comments from Atlanta head Bostic who warned that the war in Ukraine is a risk to demand and the economy could be harmed if the Fed moved too quickly.
13.15 ADP Employment Change Exp. 450K Prev. 475K
13.30 Gross Domestic Product Annualised (Q4) Exp. 7% Prev. 7%