The Monday note - 4 March 2019

• The FTSE 100 closed 86 points lower last week at 7,106.7, as geo-political risks and disappointing company results weighed on the index. The ten year Gilt yield stood at 1.30%.
• New lending by Chinese banks hit a record high in January of 3.2 trillion yuan ($477 billion), beating a consensus forecast of 2.8 trillion yuan. The government has been encouraging banks to lend to boost growth. 
• The Bank of England said that in the event of a no deal Brexit, it would conduct liquidity operations on a weekly basis, rather than monthly, in the weeks around 29th March.
• February’s UK manufacturing PMI index reported that the sector is slowing and cutting jobs. The index fell to 52.0, down from 52.6 in January – a reading of over 50 points to growth. 

Chief Economist comments: 

The weekend press was full of reports that the ERG are now willing to compromise on Theresa May’s EU Withdrawal Agreement. There is even talk of a sooner than expected vote in Parliament, on the basis that it may take two attempts to reverse the large majority recorded against the deal in January. The Prime Minister’s offer of a vote on extending Article 50 has clearly panicked the hardliners. A Brexit deal could give the economy a late March lift. Most indicators suggest it is probably needed.