ING’s commodities team says partial US aluminium tariff rollbacks won’t ease tight capacity or high Midwest premiums

TRUMP SAYS IRAN WANTS TO MAKE A DEAL WITH THE U.S. TRUMP SAYS HE WILL BE INDIRECTLY INVOLVED IN IRAN TALKS. ... TRUMP SAYS IRAN ARE BAD NEGOTIATORS AND HOPES THEY WILL BE MORE REASONABLE IN TALKS.

Members commenced their discussion of financial conditions by considering ongoing uncertainty in the global environment. Members noted that a range of new geopolitical and institutional risks had emerged since the previous meeting, including military action, tariff developments and new threats to the independence of the US Federal Reserve. For the most part, these had prompted only modest and short-lived reactions in financial markets. That said, the US dollar had weakened against a range of currencies and there had been strong gains in precious metals prices over much of January. Some of these effects had unwound following the nomination of a new chair of the Board of Governors of the Federal Reserve System, but the US dollar remained lower and gold and silver prices higher than at the start of the year. Compensation for risk in financial markets remained very low. Equity prices had risen in most major advanced economies over prior months, and measures of equity risk premia and expected future volatility were still near long-term lows. Corporate bond spreads had been little changed or had declined across advanced economies over that period. Members discussed why markets were demanding little compensation for risk despite the high level of uncertainty. They noted that this outcome could reflect in part the resilience of major economies, strong private sector balance sheets and fiscal and monetary easing in some economies. Market participants might also be finding it challenging to price genuine tail risks, given uncertainty around the probability, timing and scale of possible adverse events. It was also possible that market participants were factoring in an expectation of strong global central bank responses to any sharp downturn. Members nonetheless concluded that, with this starting point, any crystallisation of downside scenarios could cause a significant tightening of financial conditions. However, the scale and timing of any adjustment was difficult to predict. Australian equity prices had underperformed other markets over preceding months, in part because of a significant rise in expectations for the cash rate and the associated increase in bond yields. That said, demand for securities being issued by Australian firms had remained strong, including from offshore investors. RBA minutes show inflation risks ‘shifted materially’ behind February rate hike GLOBAL GROWTH HAS BEEN MORE RESILIENT THAN EXPECTED WHILE CREDIT EXPANSION AND LOOSE FINANCIAL CONDITIONS ADD TO INFLATION RISKS. POLICYMAKERS STRESSED THEY CANNOT HAVE HIGH CONFIDENCE IN ANY SINGLE FUTURE RATE PATH AND WILL RELY ON INCOMING DATA. RBA SAYS THE BOARD DEBATED KEEPING RATES UNCHANGED BUT ULTIMATELY DETERMINED THE ARGUMENT FOR TIGHTENING WAS STRONGER. ...