Market movers today
- In the US, we have a new day with Fed speakers on the wire.
- We also get ISM non-manufacturing from the US, which we expect remained on an elevated level.
- In Norway, we get February house prices.
The 60 second overview
Inflation: The global reflation-theme remains alive after last week’s set-back. Yesterday commodity prices rebound on a broad basis and inflation expectations rose, e.g. 10Y US breakeven inflation rate went back above 2.2%.
Fed: Fed Governor Brainard yesterday said the economy is still far from Fed’s goal emphasising patience. She further stated that she would be concerned about disorderly moves or a sustained tightening of financial conditions. Finally, she said Fed had tools to respond to an immoderate rise in inflation. San Francisco Fed’s Daly said she prefers QE to steer long-term yields, e.g. operation twist, to yield curve control.
Oil: It looks like OPEC+ could be nearing a consensus of a hike in production before tomorrow’s meeting. Members are said to share the view that the market can take more barrels of oil. Saudi Arabia remains key for this decision. It is apparently mulling for to phase out the voluntary output cut from February. Brent trades close to USD63/bbl.
China: China’s Caixin service PMI slipped to 51.5 in February from 52.0 dragging down the composite PMI to 52.2.
Equities: Tuesday saw a slightly dull session as equities lost the momentum from yesterday. US indexes sold off into the close, taking Dow -0.5%, S&P 500 -0.8%, Nasdaq 1.7%, Russell 2000 -1.9% lower. Despite the modest moves in yields, the rotation into value has however continued. Sector-wise, Materials and Industrials were the best off. In the other end, growth-intense IT and Consumer Discretionary were the biggest laggards. Asian markets are rebounding again this morning, with China in the lead. The same zig-zag trading visible in the US, where futures indicates an opening in green.
FI: European sovereign bond yields turned around and declined yesterday as Bank of England bought in the long end of the curve. The UK government bond curve flattened from the long end as 30Y UK yields declined 9bp yesterday. The combination of comments from Fed’s Brainard and the move in gilts supported the US Treasury curve.
FX: NOK continued its strong start to the month with EUR/NOK falling to around 10.24 yesterday. 7.4360 looks to mark the low for now for EUR/DKK after the central bank intervened around this level in February.
Credit: The credit market seemed unable to decide which leg to stand on yesterday where iTraxx Xover widened 1bp (to 248bp) and Main was unchanged at 48bp. HY bonds tightened around 4bp and IG widened a little less than 1bp.
