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MNI BCB Preview - March 2024: Focus On Potential Guidance Adjustment

All surveyed analysts believe that the Copom will continue the easing cycle with another 50bp cut, bringing the Selic rate down to 10.75%.

LATEST INSIGHT

MNI Fed Preview - March 2024: Analyst Outlook

Analyst expectations for 2024 Fed rate cuts have converged firmly on June as the starting point, but there remains a wide range of expectations otherwise.

MNI SNB Preview - March 2024: Dovish Tilt on the Cards

SNB decision could go either way, with markets split between a hold at 1.75% and a 25bps cut

MNI NORGES WATCH: On Hold In March,Tilt To Earlier Cut Eyed

Norges Bank is expected to leave its policy rate unchanged, with the focus on whether it signals an earlier cut than in its September projection.

MNI Norges Bank Preview - Mar '24: Cuts Still Some Way Off

The Norges Bank are unanimously expected to leave the policy rate on hold at 4.50%. Main interest will lie in the updated policy rate path projection

Political Risk

Support For Biden Weak Amongst Democrats

A survey from Ipsos, released over the weekend, has provided more evidence that the winner of the 2024 presidential election will likely be determined by which party can more successful motivate turnout of their base, rather than explicit support for either candidate.

  • The survey finds that, while support for both Biden and Trump is weak within their respective parties, only 30% of registered Democrat voters - who intend to vote for Biden - are doing so because they support Biden as a candidate. 57% of Democrat voters intend to cast their ballot as a vote against Trump.
  • Ipsos notes: "2024 isn’t going to come down to Trump or Biden convincing Americans to change sides – it’s more a matter of convincing their existing base to actually vote."
  • Betting markets and pollsters continue to see Trump as the slight favourite. According to Smarkets, Trump has an implied probability of 48% of winning, compared to 35% for Biden.
  • RealClearPolitics' presidential election poll tracker currently shows Trump with a 1.7% advantage over Biden (47.2 - 45.5).

Figure 1: Reasons for Voter Support for Biden and Trump

Source: Ipsos

Voters Increasingly Concerned About Iran

A new survey from Gallup has found that whilst China and Russia are still named by most US voters as the US’ “greatest enemy,” “references to Iran have grown by seven points.”

  • Iran’s rise on the list reflects months of news coverage of Israel’s war with Hamas which has renewed focus on Iran’s role in financing a network of militant groups in the Middle East, including the Houthis in Yemen who have engaged in regular attacks on commercial shipping in the Red Sea.
  • Gallup notes: “China No. 1 Enemy for Republicans and Independents, Russia for Democrats. China is among the top two countries cited as the United States’ greatest enemy by all three partisan groups. It ranks first among Republicans (67%) and independents (40%) but is a distant second to Russia among Democrats (18%). Russia ranks second among independents and nearly ties for second with Iran among Republicans. Independents (11%) are far more likely than Republicans (1%) or Democrats (2%) to name the United States itself, putting the U.S. third on their list.”
  • The report also suggests that, along with softer support for Ukraine, US voters now consider the risk from Russia markedly lower than during 2023 - a voter perception which may impact Congress' ability to legislate new aid for Ukraine.

Figure 1: Americans' Perceptions of the United States' Greatest Enemy

Source: Gallup

Schumer May Have To Move This Week To Salvage Bipartisan Tax Bill

Senate Majority Leader Chuck Schumer (D-NY) may have to schedule a cloture vote on the USD$78 billion bipartisan tax bill this week or risk the legislation stalling permanently in the Senate Finance Committee.

  • The legislation, which extends child tax credits in return for some business tax deductions, is currently delayed in committee after negotiations between Chair Ron Wyden (D-OR) and ranking Republican Mike Crapo (R-ID) last week failed to reach a compromise which would avoid a re-write of the bill.
  • Politico notes: "This might be the only chance remaining to stop fraud in the pandemic-era Employee Retention Credit - something Wyden and House Ways and Means Chair Jason Smith (R-Mo.) relied on to pay for almost all of their $78 billion bill... The IRS continues to process ERC claims, essentially meaning that it’s now or never when it comes to trying to weed out fraudulent applications."
  • Schumer, who supports the bill, could effectively end the Senate Finance Committee’s role in shaping the bill by finding 60 votes and invoking cloture to overcome a filibuster. There are several GOP Senators who are on the record in favour of the bill so there is a good chance Schumer could successfully navigate a bipartisan vote, should he decide to pursue this strategy.

Sullivan: A Major Ground Operation In Rafah Would Be "A Mistake"

White House National Security Advisor Jake Sullivan has told reporters that President Biden told Israeli Prime Minister Benjamin Netanyahu today that Israel has, "a right to go after Hamas," but took the strongest position yet against a major ground operation in Rafah.

  • Sullivan says that Biden noted a serious degradation of humanitarian conditions within Gaza in areas that Israel has "cleared but not stabilised."
  • Sullivan says that the US has learned from their own military experiences that, "a military plan cannot succeed without an integrated humanitarian plan and political plan."
  • Sullivan said: "The President has repeatedly made the point that continuing military operations have to be connected to a clear strategic endgame... The President told the PM again today that we share the goal of defeating Hamas but we just believe you need a coherent and sustainable strategy to make that happen."
  • Sullivan says that Israel is "now talking about" launching another major military operation in Rafah without adequately stabilising the areas of Gaza that have already been cleared.
  • Sullivan says Biden and Netanyahu "spoke at length about Rafah," and Biden "explained why he is so deeply concerned," about the operation.
  • Sullivan says that Israel has not presented a plan on how to safeguard civilians and a major ground operation "would be a mistake" which would "deepen the anarchy" in Gaza and "further isolate Israel internationally." Sullivan also suggests that the operation may cause Egypt to withdraw support for Israel.
  • Sullivan notes that ceasefire negotiations in Qatar remain "live" and should be achievable.

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