Brexit again

Just in case

A rooftop car park in Farnborough has attracted media attention. Their interest stems from its unique feature: no vehicular access. Local planners say it was never intended to be used - it is there just in case extra car-parking should become necessary. A bit like the Bank of England's ILTRs then.

The Bank of England's what? we hear you cry. Indexed Long-Term Repo operations are the process by which commercial banks borrow liquidity from the Old Lady against the collateral of their mortgage or other assets. They have been around for six years to, in the Bank's own words, "facilitate the use of a wider range of collateral in times of increased market stress".

These otherwise unremarkable instruments are in the news this morning because of the Bank's announcement that it will turn what is usually a monthly exercise into a weekly one around the time of the EU referendum, just in case. By way of reward for its forethought the Bank has been accused of scaremongering by what the Daily Mail describes as "furious eurosceptics". The Bank will have its say on the matter later today. 

Chinese ripples

Financial markets were relatively calm yesterday, with commodities and equities mostly higher. In the FX world the difference between the Japanese yen leader and the NZ dollar laggard was less than 1%. Things might not be so comfortable today following another shocking set of trade figures from China.

There was no real sense of purpose to exchange rates on Monday. The euro and the Australian dollar were unchanged against sterling with the Canadian dollar and the Swedish krona almost so. The pound was fractionally ahead, on average, against the other dozen most actively-traded currencies.

Economic statistics were few and far between during the London session, with the most important data emerging overnight. Revisions to Japan's gross domestic product showed the economy shrinking by only -0.3% in the fourth quarter rather than the expected -0.4%, hence the yen's emergence at the head of the pack. But Chinese exports fell by more than a quarter in February from the same month last year, reawakening concern about the health of the global economy.

Carney alert

Another day of mostly low-key ecostats will give investors time to absorb what the Bank of England governor thinks about "The economic and financial costs and benefits of UK's EU membership". For that is what Mark Carney will be talking about when he attends parliament's Treasury Committee this morning.

In what will surely be his toughest gig of the year to date the governor will have to tiptoe through the minefield that has already cost the head of the British Chambers of Commerce his job. Dr Carney is officially obliged to avoid revealing his opinion on Brexit, yet that is exactly what the committee will press him to do.

Under any other business the €Z updates its estimate of fourth quarter GDP and Canada reports on housing starts and building permits.