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Good morning. The U.K. is pushing ever closer to a last-minute rush for a deal on Brexit, the U.S. appears to be flexible on the deadline for its trade truce with China and the banking sector was rattled by a bond call.

Here’s what’s moving markets this morning.

Closer to the deadline

U.K. Prime Minister Theresa May faced down an angry Parliament on Tuesday as she asked for more time to get the concessions she needs to win more support for her proposed deal. Once more, the can is kicked further down the road and as the March 29 deadline approaches, an eleventh-hour showdown now seems ever more likely, followed by either a deal or a delay. Bank of England Governor Mark Carney says Brexit will be an “acid test” for the global economy. Consider too how hard a “hard” Brexit could be as that deadline approaches.

Flexible Trump

U.S. President Donald Trump said he could see himself being flexible on the other key March deadline for markets, the end of the temporary truce in the trade war with China. If a “real deal” is in sight, “I could see myself letting that slide for a little while,” Trump said, albeit also noting he is still “not inclined” to delay raising tariffs. And Republicans are urging Trump to back the tentative funding deal reached in Congress to avoid another government shutdown.

I Should CoCo

It is not often that a will they-won’t they situation involving a contingent convertible bond becomes center stage. The market reaction to Banco Santander SA’s decision not to call its so-called CoCo bond will be closely watched as it sends ripples through this relatively new and high-risk portion of the credit market.  Here’s an explainer for those yet to become CoCo scholars. Watch the banking sector for the reverberations from this, plus the Spanish contingent in particular as the country's budget goes to a vote.

Trade Hopes

More optimism about the potential for a trade deal between the U.S. and China to eventually emerge and the possibility that another U.S. government shutdown will be avoided gave stocks a boost in Asia, and European futures are pointing to a third day in the green. The trade hopes also pushed oil a little higher, even if the quandary facing OPEC in the face of surging U.S. production was laid bare in the cartel’s monthly report.

Coming up…

Sweden’s Riksbank will make its interest rate decision and is widely expected to stay on hold and with unchanged forward guidance. It hiked in December, the first time it had raised rates for seven years. NATO defense ministers will meet in Brussels and we’ll have consumer inflation data from the U.K. and the U.S. along with euro area industrial production. On the earnings front, fund manager Amundi SA reported net outflows in the fourth quarter and brewer Heineken NV’s beer volumes came in slightly ahead of estimates.

What We’ve Been Reading

This is what’s caught our eye over the past 24 hours

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