Market movers today
Today, we have an indicative Brexit vote on the way forward, which is unlikely to be that important anymore given PM Theresa May’s promise to hold three votes on 12-14 March (on a Brexit deal, a no deal and an extension of Article 50, respectively). While we have talked a lot about the Cooper amendment recently, it may be pulled if the MPs have faith in May’s promise. The votes in March are likely to be much more important at this point.
In Norway, retail sales and the unemployment rate are due out and in Sweden a lot of confidence indicators are due out. See page 2 for more information.
In Europe, consumer and business confidence indicators for February are due and we will look for any signs of whether the European economies are rebounding soon or not.
In the US, Fed Chair Powell’s two-day hearing continues but it is unlikely to move the markets.
Selected market news
Asian equities are up 0.4% this morning as Trump seems upbeat about the meeting with Kim Jong-un as well as hinting on a series of trade deals between the US and Vietnam, thus showing the willingness of the American administration to continue striking deals and showing positive signs for the ongoing US-China trade talks.
US equities (S&P500 -0.08%), meanwhile, seemed to have a hard time decoding Fed Chair Powell’s testimony to the US Congress. Powell told Congress that the US economy faces ‘cross currents and conflicting signals’. Powell also said that the US economy grew at a ‘strong pace’ last year, but acknowledged that the start to 2019 would imply a more data-dependent US monetary policy, as both inflation and employment seem to be in line with the Fed’s dual mandate. Nothing much was new in terms of the current balance sheet roll-off and Powell continues to insist that the Fed can remain flexible on this matter. We expect the Fed at the March meeting to announce plans to end further balance sheet normalisation by the end of this year (see more in the FX Edge link under ‘selected readings’). US treasury yields are down 3bp across the curve.
Oil prices has stabilised somewhat, Brent Crude +0.7%, after sources said that US crude oil inventories (to be disclosed today) will show a drop of some 4.2m barrels compared to a median estimated forecast of +3m barrels, and Russia saying that it follows a previous agreement with OPEC to lower production by having cut production by 140,000 barrels per day since December. Markets seem to put great emphasis on the fundamental ongoing supply constraints following in part the Venezuelan crisis. Oil prices were down 3% in Monday’s trading session following Trump’s comments that ‘oil prices are getting too high’ and that ‘OPEC should relax’.
