“North Korea…..”

North Korea

Meeting in Seoul, Kim Hong-kyun, the special representative of South Korea for peace and security affairs, and his US counterpart Joseph Yun reaffirmed a commitment to push Kim Jong Un’s to drop its push for nuclear weapons.  According to a South Korean foreign ministry statement, recent provocations are probably an intro to the launch of an intercontinental ballistic missile.  Kim Jong Un who has conducted three nuclear tests since he came to power more than five years ago, claimed in Janaury to be in the final stage of preparations to test fire an ICBM (intercontinental ballistic missile).

China  

On Tuesday the People’s Bank of China (PBOC) has made an unscheduled injection of hundred of billions of yuan and a further addition of cash through daily open-market operations. Factors that could have resulted in the tightness in money markets are technical factors including the hoarding of cash by banks before quarter-end regulatory checks.  Furthermore institutions that missed payments earlier in the week included rural commercial banks.  The PBOC injections on Tuesday are separate from the central bank’s daily open-market operations, through which the monetary authority has added 110 billion yuan this week. China’s smaller lenders faced tighter liquidity this week as the benchmark money market rates climbed to the highest since April 2015.  The Central bank has been known for allowing short-term jumps in money market rates to discourage excessive borrowing.

US – Health Bill

The move to repeal and replace Obamacare which is opposed by all Democrats in Congress also faces oppositions from some Republicans. The bill has struggled to win over moderates concerned about projections that millions will lose coverage.  Earlier on Thursday the Trump administration made what it called a final offer to the group that includes repealing the essential benefits requirements in Obamacare for the individual market only however not for employer-based plans according to White House Official.  The GOP bill H.R. 1628 would reverse many gains in health coverage under the Affordable Care Act which brought the uninsured rate to a record low.  The proposal would pull hundreds of billions of dollars out of the health system by winding down Obamacare’s expansion of Medicaid and limiting its subsidies, threatening revenues for hospitals, doctors and insurance companies.

UK – Parliament back to business

Lawmakers returned back to business in less than 24 hours after the worst terror attack in more than a decade that left four people dead. On Wednesday the attack shut down Parliament leaving many lawmakers and workers in lockdown for several hours.  A car crashed into the railings outside the Parliament after running down pedestrians on Westminster Bridge. The attack comes amid political and economic uncertainty surrounding plans to start withdrawing from the European Union the week after.

EU – TLTROs

Euro area lenders took Euros 233.5 billion in free long-term loans from the European Central Bank as they prepare for potential end of extraordinary stimulus. This move gives banks four-year loans at zero percent interest.  The ECB started its first series of TLTROs (Targeted Long-Term Refinancing Operations) in September 2014, with another series on more lenient terms getting under way last year.  The 12 operations have delivered 834 billion euros to lenders.  The amount banks can borrow in TLTROs is linked to the size of their loan books, in order to help with lending to companies and households.

Euro-Area Economy

Acceleration in the euro area economy is creating jobs and stronger inflationary pressures. A broad recovery so far allowed the currency bloc to weather a period full of uncertainties ranging from the UK Brexit vote, the US administration trade policies and upcoming elections in a number of EU nations. Since the first half of 2011 input prices are rising at a fast pace and are in many cases passed on to customers. Furthermore a weaker euro and higher commodity prices add to producer’s costs.  A sign that inflation is picking up are labour shortages and acceleration in wages.

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