Morning 2-28

Economic Data from Japan was ugly. Big Misses in industrial production, retail Sales and Housing starts. NKY closed lower by 1.44 %.Weak close in US stocks also to blame. Brexit hiccups between EU/Ireland and UK causing the Pound to be sold -.7% Vs $,-1% vs Jpy and Gilts to be bought they trade higher by 30 ticks (.3%).Eurozone CPI in line with consensus 1.2% but .1 % lower than last month .Italian Inflation lower then consensus in both headline and Core. Euro a bit heavy and Bunds slightly higher ( yields -1Bps).Italian Elections are this weekend but markets not expecting any fireworks,1 week Euro Vol relatively tame .Yesterday Powell Deemed hawkish By market but not surprisingly so as Most recent High Yields in 10s and 30’s have not been broken. Dollar traded right up to solid resistance at 90.563 in the spot yesterday and today a solid break above this level could see some real panic from the shorts. No Powell testimony today due to a scheduling issue with Congress. First revision of Q4 GDP is today’s highlight and still has ability to move markets if it is only for a few minutes.
Yesterday’s API numbers resulted in a choppy response in Crude oil as Oil storage bearish but Cushing draw was bullish. Currently oil little changed as markets await EIA at 9:30. Soymeal higher again today +21% this month and scored only 2 down days during this stretch. Wheat concerned about poor growing conditions in Great Plains +1.6% this morning and looking at five consecutive higher close.
US yield Curve continues to flatten today but in a bullish fashion. More rate hikes priced in and/or less worries bout Inflation are the cause of the Long end outperformance today. 2-year yields unchanged and 30’s -1.7Bps.
Items of Note:
• SPX and Dow headed for first monthly loss in 10
• Oil has had a very volatile month but headed to closer for first in 6
• China Manufacturing PMI reported weakest in 1.5 years. Market ignoring for Now as the Lunar new Year to blame
• Copper heavy due to china numbers
• Watch Spending components in GDP to see if tax cut impact is evident

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.