The biggest event for markets this week will be Thursday’s meeting of the European Central Bank’s governing council and the press conference following it from ECB president Christine Lagarde.
Why it matters: With interest rates jumping around the globe, investors are looking to central bank heads to see if they will follow the lead of Fed chair Jerome Powell, who says rising rates are nothing to worry about, or Bank of Japan governor Haruhiko Kuroda, who has drawn a line in the sand on rates.
The big picture: Government bond yields are rising because central bankers say they want inflation, but rising inflation expectations come with higher borrowing costs in a world that already is indebted to the tune of 356% of global GDP with no real plan to reduce its debt load.
The latest: The continuation of the selloff in equities seen on Friday could push policymakers toward a new sense of urgency.
What they’re saying: Lagarde said in late February that the ECB was “closely monitoring” interest rates, but has not firmly committed to taking action that could include increasing the central bank’s bond-buying programs or even lowering its -0.5% interest rate, as other members of the governing council have suggested.
Where it stands: The world’s leading industrialized central banks — the Fed, BOJ and ECB, which collectively hold around $23 trillion on their balance sheets — are facing a moment of truth.
The concern from ECB leaders over rising bond yields is especially notable given how much more U.S. government yields have moved higher than their European counterparts this year.
By the numbers: German 10-year government bond yields, the European benchmark, have risen from -0.61% to start the year to -0.30% as of Friday.
What it means: The increase in U.S. Treasury yields has been more than double that of comparable German bunds and pushed the spread between the two to its most negative in more than a year.
Venezuelan citizens participate in the vote for the popular consultation in December 2020, as part of a protest against Venezuelan President Nicolás Maduro in Doral, Florida. Photo: Chandan Khanna/AFP
Venezuelans living in the United States will be eligible to receive temporary protected status for 18 months, the Department of Homeland Security announced Monday.
Why it matters: Tens of thousands of Venezuelans have fled to the U.S. amid economic, political and social turmoil back home. Former President Trump, on his last full day in office, granted some protections to Venezuelans through the U.S. Deferred Enforced Departure program, but advocates and lawmakers said the move didn’t go far enough.
Decades of the slow economic progress women made catching up to men evaporated in just one year.
Why it matters: As quickly as those gains were erased, it could take much, much longer for them to return — a warning Treasury Secretary Janet Yellen issued today.
– Pace of ECB bond purchasing slows despite market jitters
– The European Central Bank and the market's moment of truth
– ECB Pandemic Purchases Stay Muted Amid Drag of Maturing Debt
– Euro zone bond yields tick up as ECB slows bond buying
– Markets look to ECB for reassurance on cheap money
– Oliver Mangan: Markets want to see action from central banks
– Draghi's conflict with Merkel's Germany threatened EU: 'Barely on speaking terms'
– ECB fails to raise emergency bond buys, blames redemptions
– Eurozone government bond yields rise
– Let's talk about bonds: Five questions for the ECB