Cannot take eyes off Britain and Europe! ～ Highlights and event schedule for March 25 ～

Last weekend brought surprising numbers, with PMI in various European countries being the factor, leading to global stock declines and a risk-off sentiment. The euro fell sharply, while the yen, franc, and U.S. dollar were bought.

Furthermore, at the EU Summit, the Brexit deadline was extended to April 12, but the possibility of a no-deal Brexit is gradually becoming more likely. It feels like I say this every week, but this week is likely a turning point. In addition to Brexit proposals and no-deal Brexit, there is also a coup attempt against Prime Minister May from within the Conservative Party (a no-confidence motion against the party in which Prime Minister May serves). At this late stage, what will happen if the prime minister changes, I wonder...

In addition, signatures are continuing to accumulate for revoking Brexit and for rejoining the Lisbon Treaty Article 50 (wishing to remain in the EU). It is said that the current number of signatures has surpassed 5 million, and demonstrations on the scale of 1 million are said to be taking place on weekends.

◎ Today's Points of Attention

1) The UK Parliament and the May government

In the UK Parliament, it is expected that debate on amendments will begin toward the third Brexit deal vote.

① Will the amendments enable passage of Prime Minister May’s withdrawal agreement!?

② Will they push for another no-deal Brexit!?

③ How will topics that have signatures on Parliament's site be treated (revocation of Brexit)!?

④ No-confidence motion against Prime Minister May!?

What is attracting attention in Parliament is as mentioned above.

2) Continuation of Risk-Off

From the results of European economic indicators last weekend, it shifted sharply toward risk-off. Will the risk-off trend continue today? Or will risk be limited and a temporary calm return? It’s a point of focus.

What to watch are Germany’s business sentiment index, the 10-year yields of Japan, the U.S., and Germany, and the U.S. short- and long-term yields. If the 10-year yield rises or U.S. yield curve inversion is unwound, the risk-off trend is expected to ease.

3) Seasonal Factors

This week is the end of the fiscal year. What’s considered at year-end is the closing of the books for liquidity operations (repatriation), which is expected to settle today. To realize gains from external debt holdings and foreign stocks in pensions, life and non-life insurance, and banks, there may be yen buying to bring profits domestically. Once repatriation settles, funds may be prepared in dollars for the new fiscal year investments.

Also, today is the 25th and a Kadomatsu day (the 50th day). Movements described above are expected to gather into the call/receiving rate (or similar metrics). I will be watching closely.

◎ Today's Event Schedule

Monday, March 25

10:45 USDEvans, President of the Chicago Fed, Speech

18:00 EUR Germany Ifo Business Climate Index

19:00 USD Harker, President of the Philadelphia Fed, Speech

Tuesday, March 26

05:30 AUDEllis, RBA Deputy Governor, Speech

06:45 NZD NZ Trade Balance

08:50 JPYMain Opinions from the Bank of Japan Monetary Policy Meeting (March 14–15)

09:30 USDRosengren, President of the Boston Fed, Speech