Morning 2-9

A bit of sideways action so far overnight in Stocks. Treasury Curve continues to flatten for second day after steepening to start February. Both 10- and 30-year yields touched multi month highs then turned tail and moved lower as part of the flattening Curve. The XLF still moving higher, not one red day so far in February but let us see if the flatter curve has any impact, same goes for banks KBW bank index. BBG flagging up that Average junk bond yields have dipped below 4% for the first time ever   okay then it appears no worries about any companies’ ability to survive this pandemic/recession. Yesterday saw 6-year highs   for both 5- and 10-year inflation breakeven, a little bit of inflation is good, for now, Brent printed north of $61 today, Platinum continues upward trend a break of 1195 will be highest price in 6 years. Reflation trade worries about inflation are good for commodities. USDA report today and Grains higher, yes fundamentals a big part of the story South American weather, China Demand but also too outright Commodity demand as a hedge against inflation.  Another stimulus bill in the pipeline regardless of size is still going to give a boost to spending so Inflation expectations unlikely to pause for long.  DTN Ags with a note saying that some countries that do not handle Inflation well may have to increase export controls to tamp down prices I.E. Argentina and Russia. More commodities that we rarely mention Soy oil highest in 6 years palm oil multiyear high as well. China Lunar New Year starts Friday.

 Real yields continue to trend lower if they continue Risk likely to maintain a bid. JGB yields easing higher as Futures have fallen for 10 consecutive days longest streak since 2003, 40 year yields highest since march 2019 speculation that BOJ could widen band of JGB yields aka less control of rates (IFR). Bitcoin off overnight highs of 48,885 in futures but s till +$1500 on day

News:

 White House Press Secretary Jen Psaki said that the plan will probably advance under the budget procedure which means it will only need a simple majority in the Senate for approval. Biden is being won over by liberal Democrats who cite the reduction in the size of the 2009 bailout as the cost of reaching compromise with Republicans. -Morning money (MM)

The Senate begins former President Donald Trump’s second impeachment trial today with a fight over whether it can proceed at all-MM

Small business optimism index drops to 8 months low “economic conditions deteriorated sharply.”

In the fight to suppress Covid-19, Japan has found success by stripping down its policy to one simple measure: closing restaurants and bars at 8 p.m.  WSJ

the Philippines plans to import around 400,000 MT of pork this year to help cover a domestic meat shortfall and rein in inflation. This is more than double the initial proposal to bring in 162,000 MT of the meat. The country’s hog herd was hit by African swine fever. -pro Farmer

Markets:  Spoos for second day in a row have 15 handles overnight range Vix attempting to break below 21 handle European stocks sideways to lower, Asian stocks higher CSI 300 +2.1%

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