- NASDAQ and S&P close lower for the second consecutive day
- WSJ Timiraos. KC Fed says that there may be a false dawn in easing rents
- WTI crude oil futures settles at $77.69
- February was a rough month for just about everything
- ECB going to 4%, but who is counting? - Credit Agricole
- Einhorn on CNBC: Still think we should be bearish on stocks
- Atlanta Fed GDPNow dips to 2.3%
- Commodity markets come into March like a lion
- EIA weekly crude oil inventories +1165K vs +457K expected
- US 10-year note yields touch 4% after hot prices data in the ISM manufacturing survey
- ECB's Visco: The pace of further hikes beyond March will be decided on the basis of data
- Bostic maintains view that rates need to rise to 5-5.25% and stay there well-into 2024
- US construction spending for January -0.1% versus 0.2% expected
- US Feb ISM manufacturing 47.7 vs 48.0 expected
- US S&P Global final February manufacturing PMI 47.3 vs 47.8 prelim
- Canada S&P Global manufacturing PMI 52.4 vs 51.0 prior
- Fed's Kashkari: Inflation is not yet being driven by the labor market
- ECB's Nagel: Significant hikes beyond March are necessary
- The NZD is the strongest and the USD is the weakest as the NA session begins
- Germany February preliminary CPI +8.7% vs +8.5% y/y expected
- ForexLive European FX news wrap: Dollar slumps as March trading gets underway
- US MBA mortgage applications w.e. 24 February -5.7% vs -13.3% prior
The USD started the day lower.
Catalysts over night included stronger China manufacturing data (strongest in a decade). That sent the USDJPY lower, and the NZDUSD higher. The AUDUSD also moved higher but it announced lower inflation which limited the upside momentum.
Germany also announced higher preliminary inflation which helped to propel the EURUSD to the upside (and the USD lower).
The BOE Bailey was more neutral in his speaking gig in the early European session which helped to limit the GBPs gains, but it too was higher.
Overall, the NZD was the strongest of the majors and the USD was the weakest - by far - at the start of the day.
Later in the US session, the dollar moved back to the upside a bit helped by rising yields. Currencies like the JPY and the GBP moved lower. The JPY is ending the day as the weakest of the majors (see table below). The USD is still weak, but most of the declines can be attributed to the moves vs the NZD and the EUR (down -1.21% and -0.88% respectively).
The catalyst back higher in the USD, was move higher in yields. More specifically, the US 10 year moved up to 4.0%. That was the highest level since November. It is trading just below that key barometer at 3.996% currently.
The higher 10 year yield helped to send the October Fed funds contract toward 5.5% (on a yield basis). That level is pricing in an even tighter fed funds target for the dot plot.
Recall the December dot plot came in at 5.11% (basically 5.00 to 5.25% range - the Fed has a range of 25 basis points for their target). At 5.5%, it is saying a terminal rate target of 5.375% to 5.625% (that is how I interpret it). That's 50 basis points higher than December.
In US news, the ISM manufacturing data came out and although weaker at 47.7 vs 48.0 estimate, the prices paid component rose sharply to 51.3 from 45.1 estimate and 44.5 last month. Inflation fears persist.
Copper, natural gas, crude oil, gold and silver were higher mainly helped by the China news.
A snapshot of the markets shows:
- spot gold rose $10.42 or 0.57% at $1837.80
- spot silver is up 9.8 cents or 0.45% $20.99
- WTI crude oil is a $0.65 or 0.4% to $77.71
- Bitcoin is trading at $23,544. At the start of the New York session the price was trading at $23,716
In the US stock market, the Dow squeaked out a small gain, while the S&P and NASDAQ index closed lower.
- Dow Industrial Average rose 0.02%
- S&P index fell -0.47%
- NASDAQ index fell -0.66%
Looking at the treasury yields:
- two year yield 4.878%, +8.2 basis points
- five year yield 4.257% +9.0 basis points
- 10 year yield 3.996% +8.2 basis points
- 30 year yield 3.957% +2.8 basis points
