“The Job Market In France ….”

The Job Market In France  

The unemployment rate in France dropped below nine per cent for the first time since 2009.  The rate fell to 8.9 percent in the fourth quarter of last year from 9.6 per cent in the previous three months according to national statistics office INSEE.  This was the steepest drop since the 2008 financial crisis.  Macron’s first major policy initiative as president was to change labour rules to give firms increased flexibility to hire and fire staff.  The French economy is creating jobs at its fastest rate since 2007.  The government is planning to invest EUR 15 billion in job training over the next five years, significantly expanding apprenticeship schemes under broader changes to be presented in April.

UK Wages 

UK wages are picking up after employment among citizens of the eastern countries that joined the European Union more than a decade ago fell for the first time since 2009.  According to the Office for National Statistics the average weekly earnings excluding bonuses rose 2.5 percent in the fourth quarter from a year earlier, which is the most since December 2016.  The overall employment rate rose to 75.2 percent close to a record, though unemployment increased to 4.4 percent, as fewer workers were economically inactive.  After the release of the data, the sterling weakened, sliding 0.5 percent to $1.3923.  The growth in wages is still slower than inflation which is running at 3 percent.  The private sector pay gains accelerated to 2.6 percent from 2.5 percent.

Latvia

Latvia a banking hub, has long faced questions over the enforcement of money laundering rules.  These concerns have further increased when the central bank governor Ilmars Rimsevics was detained over the weekend by the country’s anti-corruption agency on suspicion of securing bribes.  Rimsevics has led the central bank since 2001, making him the longest serving head of a national bank on the European Central bank’s Governing Council, when he joined in 2014 and when Latvia adopted the euro.  He was released on bail Monday and has not been formally charged.  He also denied seeking bribes.

Meanwhile In Germany…

Chancellor of Germany Angela Merkel has on Monday put forward her close ally Annegret Kramp- Karrenbauer, known as “AKK” after her initials, to take over as secretary general of her Christian Democratic Union (CDU). She is expected to be voted into the role at next Monday’s CDU party congress.   This is a significant decision as some of the CDU members are starting to look ahead to a post-Merkel era and think about potential alternatives to lead their party and country.  She is a fluent French speaker and commands respect in the party for her serious factual approach to policymaking.

ECB Minutes

The minutes of last month’s European Central Bank policyholders meeting show that members felt it was too early to change their communication stance to signal a normalisation of policy, even though confidence was growing that inflation would finally rise back to target.  It was concluded that the bank needed to avoid abrupt adjustments and to keep a close eye on the euro’s firming according to the minutes published on Thursday.  The minutes further added that “there was broad agreement among members that the recent volatility in the exchange rate of the euro was a source of uncertainty which required monitoring”.  Policy makers are in particular sensitive about the moves of the euro as a big rise in the currency could cut into inflation, threatening to reverse the impact of the stimulus the bank implemented over the past three years.  The ECB said that “the language pertaining to the monetary policy stance could be revisited early this year as part of the regular assessment at the fourth coming policy meetings.”

US Short-Term Borrowing Costs

Some of the US government short-term borrowing costs rose to their highest level in more than nine years on Tuesday as it raised $179 billion in Treasury securities market to cater for spending and debt payments.  The bonds consisted of $151 billion of short-term notes and $28 billion of two-year debt.

The FED Minutes

At its last policy meeting, the Federal Reserve rate setting committee showed more confidence in the need to keep raising interest rates.  The minutes showed that both voting members and the wider group of policymakers had upgraded their forecasts for the economic outlook since December.  “Members agreed that the strengthening in the near-term economic outlook increased the likelihood that a gradual upward trajectory of the federal funds rate would be appropriate”. It further added that recent information on inflation received by voting members, “along with prospects for a continued solid pace of economic activity provided support for the view that inflation would likely move up in 2018”.  The minutes further added that “almost all participants continued to anticipate that inflation would move up to the 2 percent objective over the medium term as economic growth remained above trend and the labour market stayed strong.”  In the December meeting, fewer policyholders had expressed such confidence.   The US dollar rebounded against a basket of currencies after a brief dip after the publication of the minutes.    Whilst US stocks didn’t change on the day, the yield on the 30 year Treasury bond rose to its highest since July 2015.  Most members saw a modestly stronger near-term outlook and several saw increased upside risks saying the Trump administration’s tax policies might boost the economy more than previously thought.

Worldwide Currencies

The single currency fell 0.1 percent against the dollar after reducing it losses after a survey showed business confidence in the private sector of Germany hit a record high in February.  Investors sensed that the dollar was oversold and went back into the euro.  It is now at $1.2315, a 2 ½ cents off its Friday high.  The dollar has fallen this year amid strong economic performance in other regions when monetary policy is about to be tightened and concerns that the United States is facing a growing budget deficit.  Markets have calmed since the meeting of the ECB.  While the euro is 4.5 percent higher against the dollar than six months ago, it has fallen around 2 percent lower from a recent peak.  Sterling traded down at $1.3965 ahead of UK wages, data that analysts are expecting it will confirm the Bank of England’s more hawkish stance.

Revenue From Commodity Training

Revenue related to commodities at the twelve biggest UK investment banks fell by 42 percent last year to its lowest since at least 2006, according to a report by financial industry analytics Coalition.   The report stated that revenue from commodity trading, selling derivatives to investors and other activities in the sector fell to $2.5 billion in 2017 from $4.3 billion the previous year.  Revenue was the lowest since Coalition began analysing bank data in 2006. Commodity revenue for banks has been on a steady downward path in recent years as they have cut down their commodity businesses due to heightened   government regulation and poor performance from the sector.

Oil

Oil prices changed a little on Wednesday ahead of data which expected to show rising crude inventories in the United States as the dollar strengthened from last week’s three year low.  On Thursday however oil prices rose to two-week highs boosted by data showing a surprise draw in US crude inventories and also by a drop in the dollar.  West Texas Intermediate crude futures rose about 1.8 percent to settle at $62.77 a barrel.  US crude traded between $60.75 and $ 63.09 its highest since February.

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