“German Industrial Orders …”

German industrial orders dropped more than expected in February amid weaker demand from abroad according to data on Wednesday.  Supply shortages and a climb in energy prices impacted manufacturing activity while the war set a gloomy outlook.  Figures from the Federal Statistics Office showed that orders for industrial goods dropped in the month by 2.2% in seasonally adjusted terms after an upwardly revised increase of 2.3% in January.  A breakdown of the data showed that foreign orders dropped by 3.3% and demand for both intermediate and capital goods dropped by 1.9% and 2.8% respectively.  Consumer goods orders were up by 0.7%. 

EU unveils new sanctions on Moscow

The EU’s executive proposed new sanctions against Russia on Tuesday, including a ban on coal imports, as the West responds to evidence of civilian killings.  The proposed sanctions which EU member states must approve, would block Russian imports worth EUR 9 billion and exports to Russia worth EUR 10 billion, including semi-conductors and computers and stopping Russian ships from entering EU ports. European Commission President Ursula von der Leyen said it was working on banning oil imports too.  On Twitter she said, “We all saw the gruesome pictures from Bucha and other areas from which Russian troops have recently left. These atrocities cannot and will not be left unanswered”.  Some European countries such as Germany, France and Italy, have announced expulsions of Russian diplomats and Moscow said it would respond in kind.  In view that Europe gets about a third of its natural gas from Russia, there was scepticism about the economic impact a total ban on Russian energy will bring. Von der Leyen said that in comparison to last year’s Euros 100 billion in oil and gas imports from Russia, a ban on Russian coal by the EU would be worth EUR 4 billion a year.  Russia denied that its forces had carried out any atrocities and said it would present “empirical evidence” to the U.N. Security Council meeting proving its forces were not involved.

March Meeting Minutes

The minutes of the Fed’s March 15-16 meeting show deepening concern among policymakers that inflation has increased throughout the economy, prompting them to not only raise the target policy rate by a quarter of a percentage point from its near-zero level but also to push it to around 2.4%.  “Many” Fed officials were ready to increase rates in half-percentage-point increments in the coming policy meetings to try to bring prices under control.  They further moved forward with the plans to pull out of key financial markets that have been benefiting from massive FED support since March 2020, when the coronavirus pandemic let the central bank buy trillions of dollars in Treasury bonds and mortgage-backed securities (MBS).  The pace of the planned balance-sheet rundown, which should have the effect of increasing long-term interest rates, is nearly double that of the Fed’s “quantitative tightening” from 2017 to 2019, and could also include outright sales of MBS down the road, said the minutes. “All participants agreed that elevated inflation and tight labour market conditions warranted commencement of balance sheet runoff.”  The FED’s bond-buying program in the spring of 2020 increased its holdings of Treasuries and MBS from $3.8 trillion to $8.5 trillion.  After the minutes were released the 10-year note  (US10YT) yield rose to 2.6%, while the dollar rose to its highest level since late May against a basket of currencies.  Furthermore, major US stock indexes closed lower.   

US Factory

The Commerce Department on Monday said that factory orders dropped by 0.5% in February.  Meanwhile, data for January was slightly revised upwards to 1.5% from 1.4% as previously reported.  The decline could be a result of persistent shortages of materials and a shift in spending back to services however, manufacturing remains supported by low inventories. 

EU to issue a 20- year Green Bond

On Tuesday the European Union had to issue a EUR 6 billion bond with a 20-year tenure according to lead managers by Reuters.  The funds from the bond issue are targeted for member states’ environmentally friendly projects that are part of the bloc’s coronavirus recovery fund.  The bond is due in 2043 and shall pay a spread of 11 basis point over the mid-swap level, according to the memo.  This is the second EU green bond following last October’s issue. In what was the first EU’s first bond issuer of green bonds,  the bond was met by record demand paving the way for the bloc to become the largest issuer of green bonds.  The EU hired BofA, Citi, Credit Agricole, Danske Bank and JP Morgan for the sale on Monday.   

Oil

On Monday, oil prices jumped over 3% on Monday, as investors worried about tighter supply as the increased number of civilian deaths in Ukraine increased pressure on European countries to impose sanctions on the energy sector in Russia.  Global benchmark Brent crude jumped 3% to settle at $107.53 a barrel while US West Texas Intermediate crude rose by 4% to settle at $103.28 a barrel.   Olaf Scholz, the German Chancellor said that Russian President Vladimir Putin and his supports would “feel the consequences” of events in Bucha, outside the capital Kyiv, where a mass grave and tied bodies shot at close range were found.  Oil futures rose on Tuesday amid the plans of the US and Europe to punish Moscow over the war crimes by Russian troops in Ukraine, that raised concerns of tighter global supply while the Iran nuclear talks stopped.  Brent crude futures rose by 1.7% to $109.40 a barrel, while US West Texas Intermediate futures were also up by 1.8% at $105.11 a barrel.  Meanwhile, oil futures dropped sharply on Wednesday after nations that consume large amounts stated they would release oil from reserves to counter effect the tight supply and the hawkish minutes from the US central bank.  Selling pressures increased at the close of session with both Brent and West Texas Intermediate benchmarks at their lowest closing levels since 16 March.  Brent crude futures settled lower by 5.2% at $101.07 a barrel while US crude dropped 5.6% to $96.23 a barrel.  Concurrently, the International Energy Agency (IEA) will release 120 million barrels from strategic reserves. The release will include 60 million from the US, the latter forming part of the previous US announcement of a 180 million-barrel reserve release.  This is the second time the IEA has released reserves this year and boosted worldwide supply by roughly 2 million barrels a day for at least the next two month to possibly countereffect the potential loss from Russian oil.    

US Trade Deficit

The Commerce Department said on Tuesday that the trade deficit dropped 0.1% to $89.2 in February.  Meanwhile, data for December was revised to show a $89.2 billion shortfall, still an all-time high, instead of the previously reported $89.7 billion.  As the US trade deficit barely moved, it suggests that trade remain a drag on economic growth in the first quarter. 

China’s services sector

Activity in China’s services sector declined at the sharpest pace in two years in March amid a surge in coronavirus cases impacting mobility and demand, showed a private sectors survey on Wednesday.  The Caixin services Purchasing Managers’ Index (PMI) dropped to 42 in March from 50.2 in February, dropping below the 50-pont mark that separates growth from contraction on a monthly basis.  This is the sharpest drop since the beginning of the COVID-19 pandemic in February 2020.  Furthermore, a sub-set for new business dropped for a second consecutive month, and at the fastest pace since March, 2020 while firms’ input prices rose in March after easing after a six month low in February.   

Malta:  Registered Unemployment – February 2022

A press release dated 5 April, 2022 shows that the data provided by Jobsplus for February, 2022 shows that the number of persons registering for work dropped by 1,460 when compared to the corresponding month in 2021.  The largest share of male and females on the unemployment register sought roles as Clerical support workers, with 21.3% and 38.9% respectively.     

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