Financial Markets
Top stories summarized by our editors
4/25/2017

President Donald Trump has instructed that a reduction of the corporate tax rate to 15% be a key part of a tax-overhaul outline scheduled for announcement this week, sources say. Trump reportedly is ready to proceed even if loss of revenue requires him to abandon a campaign promise to reduce the budget deficit.

4/25/2017

The Bank of Japan is conducting a study that simulates the withdrawal of stimulus, said Deputy Governor Kikuo Iwata. He told parliament that the central bank didn't want to draw attention to the simulation because it might cause confusion in the markets.

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Reuters
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central bank, BoJ
4/25/2017

The Eurotop 100 index surged to a new high and affirmed its uptrend, which began with the breakout and golden cross in early December. This surge affirms support around 2,900, and this is the first area to watch going forward. Despite a new high, the index is still performing in line with the Standard & Poor's 500 index. Note that the EUR:$SPX ratio has been flat over the last 10 months. The top European stocks are not outperforming the top US stocks until this ratio breaks out.

-- Arthur Hill, CMT

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StockCharts
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Arthur Hill
4/25/2017

The European Commission plans to launch an EU Blockchain Observatory to advise the EU on blockchain and other distributed-ledger technology matters. The body would be given a €500,000 budget over the next two years to explore the role of public authorities in the regulation and growth of blockchain technology.

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Finance Magnates
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European Commission, EU
4/25/2017

European high-yield bonds experienced €1.5 billion in outflows in March as economic growth leans toward the stock market, JPMorgan Chase data show. "We would expect the strong search for yield to reverse as rates investors move out of higher-yielding credit and investors focus on the upside for European equities," JPMorgan strategists wrote in a note to clients Monday.

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Bloomberg
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JPMorgan Chase, stock market
4/25/2017

Britain's Labour Party said it rejects the Brexit plan backed by Prime Minister Theresa May, leader of the Conservative Party, and instead will give priority to preserving the benefits of access to the European single market. The Labour Party will not support any deal that doesn't give the UK "the exact same benefits" as full membership in the internal market, according to a speech to be delivered by Keir Starmer, Labour's shadow secretary of state for Brexit.

4/25/2017

With the political pressures of the French election largely subdued, markets are pricing a 60% chance that the European Central Bank will increase interest rates over the next year. Economic growth is gaining momentum in the eurozone, with France outpacing Germany in April, proving that the recovery is spreading throughout the EU.

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Reuters, Bloomberg
4/25/2017

Greek 10-year bond yield hit 6.2%, the lowest since 2014, after the European Commission reported that Greece had achieved a primary budget surplus of 4.2% in 2016, beating its 0.5% creditor target.

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European Commission
4/25/2017

Authorities responsible for dealing with failing central counterparties haven't been given powerful enough tools to successfully deal with the problem, according to experts speaking at a World Federation of Exchanges event in Frankfurt, Germany. Robert Cox, a senior vice president at the Federal Reserve Bank of Chicago, said that if resolution authorities were given sufficient powers, that alone might eliminate the need for the resolution of CCPs.

4/25/2017

While neither the US nor the UK have settled on an alternative to the London Interbank Offered Rate, global regulators seem to be leaning toward a secured (repurchase agreement) overnight benchmark, writes Stanford University business professor Darrell Duffie. When an overnight benchmark rate is selected, it can be compounded daily to determine monthly, quarterly or semi-annual interest payments, he writes.