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Reuters reports that the Brexit crisis is weighing on the European bond market.
German 10-year bonds (public debt) are trading at a negative return today, which means investors are paying more than their face value. This means a small loss guarantee, in return for the comfort of not losing more money.
Low bond yields are a sign that investors are expecting low economic growth, so negative returns are a worrying sign.
Reuters explains:
"It seems that British MPs want to avoid a Brexit at all costs, but they do not vote for one of the alternatives and time is running out," said DZ Bank strategist Daniel Lenz.
"So I think investors need to be prepared for the possibility that Brexit, which has not been negotiated, will come to an end in 10 days; it affects the yields a little this morning.
German 10-year government bond yields, the bloc's benchmark index, declined by one basis point to minus 0.03%, while those of most other bonds in the zone euro were 1 to 2 basis points lower on that day.
Photography: Jonathan Green / Rolls-Royce
Speaking of air travel … Singapore Airlines has just grounded two 787-10 Dreamlinerafter experiencing problems with their Rolls-Royce Trent 1000 TEN engines.
The airline noted a "premature deterioration of the blades" on the engines and removed the jets from service until the engines were replaced.
Rolls-Royce shares fell by more than 1% early in the session.
Trent 1000 engines have been problematic in the past – Rolls-Royce has been forced to redefine some parts and accelerate its program of checks and repairs after previous models have also been corroded on the blades of their turbines.
Photography: Andy Rain / EPA
Brexit worries forced HSBC badysts to lower the rating for three low-cost airlines this morning.
HSBC has demoted easyJet, Ryanair and Wizz Air to "hold" them, to "buy".
He warned that demand for low-cost flights was "weakening in Europe" in the face of Brexit concerns and slowing global growth.
EasyJet surprised the city yesterday by warning that the Brexit crisis was lowering the price of the ticket, as pbadengers hesitated to book flights in the current confusion.
Update
Jim Reid of Deutsche Bank (DB) reported on the general election risk his clients are facing today:
Attention is now focused on today's marathon cabinet meeting, scheduled from 9:00 to 12:00 and 13:00 to 15:00. The morning session will be reserved for politicians and not for civil servants. This means that Premier May and her team are likely to consider options, including the calling of general elections. This is the basic case of Olivier Harvey, of DB, but the parliamentary calendar of May leaves him a margin of maneuver so that his WA is convened for a fourth vote tomorrow if it wishes it.
Sterling strengthened over most of yesterday and rose about 0.52% when New York returned home. After the votes, the currency has fallen more than 0.5% and is trading slightly above these levels this morning.
British business groups are also extremely exasperated by the parliament.
Helen Dickinson OBE, managing director of the British Retail Consortium, warned that buyers would pay the price if Britain withdrew from the EU in mid-April.
"Parliamentarians are playing a reckless chicken game that will result in a disaster unless a sufficient number of MPs can convince to support a clear outcome that avoids a chaotic Brexit without agreement.
Unless the majority of MPs agree to an action plan that avoids agreement, ordinary families will face higher prices and fewer choices on the shelves. "
Introduction: the pound is weaker after the last Brexit block
First pages of British newspapers today Composite: Various
Hello and welcome to our slippery coverage of the global economy, financial markets, the eurozone and businesses.
The Brexit's concern is rising in the city today and in all British businesses, after the Parliament has again failed to find a way out of the quagmire.
The pound plunged last night when investors learned that MEPs had rejected several less restrictive Brexit options, including a customs union and a second confirmation referendum.
Sterling quickly yielded nearly a dime, fearing that Britain could still get out of the EU without an agreement in 10 days.
It is currently around the $ 1.304 mark, still above last week's two-week low, but it is expected to remain volatile today.
The pound against the US dollar this week Photography: Refinitiv
While Theresa May's deal is still struggling for support and the threat of an election is imminent, investors are naturally wary of the pound.
Jeremy Thomson-Cook from WorldFirst
(@WorldFirstJTC)It is not surprising that the pound fell in the aftermath of the vote, given the remaining three options: the May deal (which no one likes), no deal (no one wants), or an election ( which nobody thinks will change anything).
The City will be watching Westminster again today, as ministers meet for an unusually large Cabinet meeting to chart the way forward.
Adam Cole of the Royal Bank of Canada said investors should prepare for a fourth vote on the May withdrawal deal (although many MPs are unlikely to have changed their minds).
He writes:
In the second round of indicative votes last night, the House of Commons again rejected the four proposals presented to it, although generally with smaller margins (customs union with three votes to eight and second referendum with 12 votes to 27, but with only 15 Conservative supporters).
Tory Boles (sponsor of the CM2.0 proposal) resigned from the party after the vote. Or now? Reports suggest that May has scheduled five to six hours of cabinet meetings for today to discuss all options, including stalemate exit with general elections. We are still very much expecting her to make one last attempt to reach an agreement with small amendments, and we may have some clarification as to when we will do so today. Parliament should spend time discussing alternatives tomorrow.
Also coming today
The data firm Markit will publish today its latest survey on construction in the United Kingdom. Construction activity is expected to decline slightly in March.
CMC Markets' Davi Madden said the construction PMI would likely fall below the 50-point stagnation mark.
Construction PMI in the UK will be announced at 9:30 am (UK time) and dealers expect a reading of 49.8, which would be a slight improvement over the reading of 49.5 in February.
Yesterday, we learned that factories were stocking for Brexit (so they will probably need new warehouses to store this material?).
Christine Lagarde, head of the International Monetary Fund, delivers a speech on the global economy. It is entitled "Three priority areas of action".
L & # 39; s calendar
- 9.30am: BST: UK PMI report on construction for March
- 1:30 pm: US durable goods orders for February
- 2:30 pm: IMF head Christine Lagarde speaks in Washington
Update
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