Economic Update – ECB Hand Out €233 Billion to Banks, UK Retail Sales Rise, More…

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Investing.com: Global stocks, bonds cheer bumper ECB cash handout

  • Euro zone stocks and bonds rallied on Thursday as banks snapped up almost quarter of a trillion euros of interest-free European Central Bank cash in what the ECB hopes will be the last outing for one of its main crisis-fighting tools.
  • Banks took a whooping 233 billion euros ($251.31 billion) at the ECB’s TLTRO (targeted long-term refinancing operation), over 100 billion more than had been forecast, fanning hopes of another spending stampede by market bulls.
  • Highly indebted Italy, Spain and Portugal and euro zone bank also saw their bonds rally, as analysts bet that they would be the first items on the shopping list of many of the 474 banks that had taken the ECB money.
  • “That (TLTRO) was a policy designed for extraordinary times, we are not in them now,” said Nick Gartside, JP Morgan Asset Management’s international CIO for fixed income.

Market Watch: U.K. retail sales surge 1.4% in February

  • U.K. retail sales rebounded in February following three consecutive months of decline, data showed Thursday, but the underlying trend remained weak, suggesting the industry was unlikely to make a positive contribution to growth in the first quarter.
  • Sales in February grew by 1.4% from the previous month, the Office for National Statistics said, driven by strong sales across all categories, with household goods stores performing particularly well. Compared with the same month last year, sales rose by 3.7%.
  • But sales in the three months through February fell by 1.4%, the fastest pace of decline in nearly seven years, data also showed.

Investing.com: U.S. jobless claims unexpectedly rise to 258,000

  • In a report, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending March 18 increased by 15,000 to a seasonally adjusted 258,000 from the previous week’s total of 243,000 which had been revised from an initial reading of 241,000.
  • Analysts had expected jobless claims to drop by 1,000 from the original reading to 240,000 last week.
  • First-time jobless claims below the 300,000-level are usually associated with a firming labor market.

The Globe and Mail: Fed’s Esther George says some monetary policy stimulus can be removed

  • The Federal Reserve sees an opportunity to remove some of the monetary stimulus it has given the U.S. economy, Kansas City Federal Reserve President Esther George said on Tuesday.
  • “The Federal Reserve is moving into what I consider a very critical time,” George told an event hosted by Women in Housing and Finance.
  • George said the Fed needed to be careful not to tighten policy too much but also not to let the economy overheat, and that a decision on when to reduce the Fed’s large balance sheet would likely not be made soon.
  • “It’s going to require a lot of conversation and analysis,” she said.

Bloomberg: Fed’s Mester Favors Starting to Shrink Balance Sheet This Year

  • Federal Reserve Bank of Cleveland President Loretta Mester called for the U.S. central bank to continue with gradual interest-rate increases and begin shrinking its $4.5 trillion balance sheet this year if the economy continues to improve.
  • “If economic conditions evolve as I anticipate, I would be comfortable changing our reinvestment policy this year,” Mester said, according to the text of a speech she is scheduled to deliver Tuesday in Richmond, Virginia. “Ending reinvestments is a first step toward reducing the size of the balance sheet and returning its composition to primarily Treasury securities over time.”
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