Market movers today
- Today we get flash HICP figures from the euro area. After country releases have surprised somewhat on the upside, we expect headline inflation to increase slightly to 1.0% in February.
- German January retail sales are also released and will likely remain on a very low level due to lockdown.
- In the US, we have several Fed speakers on the schedule.
- FX reserve data are due in Denmark.
The 60 second overview
US: US ISM manufacturing rose to 60.8 in February – the highest level in three years and well above the consensus expectation. The rise was in particular driven by higher prices paid. It has not been this high since 2008. New orders and employment also rose.
Oil: Brent slipped more than USD3/bbl falling below USD63/bbl on expectations OPEC+ will decide on a normalisation of supply when it meets Thursday. Brent is around USD10/bbl higher compared to start of January, where Saudi Arabia announced a surprise cut in oil production.
Equities: The week started with a bang, with equities rallying in most regions. This sent S&P 2.4% higher, Nasdaq 3.0%, Russell 3.4% and Dow 2.0%. Cyclicals outperformed defensives, small caps beat large caps but value outperformed growth. On sectors, this summed up to a peculiar sector mix, with Financials, Tech and Energy the big outperformers. Meanwhile, Consumer staples and Health care lagged, but all sectors in green. The risk on was also felt in Bitcoins, up 4.6% for the day. All of this emphasize how important yields are to risk sentiment currently. Asian markets are slightly lower this morning though and US futures also hints of a cautious Tuesday session.
FI: From the very onset of yesterday’s trading session, the appetite for bonds was high. Bund yields declined more than 7bp to -0.33% with spread tightening led by the periphery yet again. Bund ASW spreads have been remarkably stable during this highly volatile period.
FX: Strong rebound in commodity currencies NOK, AUD, CAD and NZD vis-à-vis EUR yesterday despite a drop in oil prices and muted trading in industrial metals. Turnaround in risk sentiment led the way. EUR/NOK dropped back to around 10.30.
Credit: After a poor last week, CDS indices came roaring back yesterday where iTraxx Xover tightened to 247bp (-19bp) and Main to 48bp (-3bp). Cash bonds were somewhat softer, with HY widening 2bp while IG tightened 2bp.
