Market movers today
In the US, industrial production data for February is due out. PMIs for February indicate that US manufacturing expansion continues. Still, numbers concerning industrial production are usually quite volatile on a monthly basis.
In the euro area, the wage growth figure for Q4 17 is due for release. Wage growth pressure is key to pushing core inflation upwards and thus key for the ECB’s monetary policy decisions. Although we have seen gradually rising wage pressures since H2 16, we expect wage growth to remain around its current level in the short term. Note that revised HICP figures for February are also due for release today but we do not expect any major revision.
No market movers are due to be released in the Scandi region today.
Selected market news
Market focus remains on political uncertainty as US-Russia issues were thrown on to the agenda yesterday. Equities generally drifted lower in both the US and Asian sessions, Treasury yields edged a few basis points higher in the short end of the US curve and the US dollar generally strengthened.
Notably, tensions between Russia and a range of NATO countries flared up yesterday after Germany, France and the US called upon the Kremlin to explain its role in the recent UK spy poisoning attack. Further, the US separately went on to sanction a range of Russian individuals and groups for election meddling and cyberattacks. Also, adding to the sense of continued political uncertainty is that US president Donald Trump supposedly plans to sack his national security advisor Herbert McMaster. Finally, US special counsel Robert S. Mueller has reportedly subpoenaed the Trump Organization for documents with ties to the case of Russia meddling in relation to the 2016 election.
US TICS data for January released last night shows that Chinese holdings of US Treasuries fell in the first month of the year ; this takes the exposure down from a local peak in mid-2017. Albeit overall not a significant fall from the 2013 highs, it still hints at changing dynamics, partly as CNY now leads a life ‘somewhat separate’ from the USD. However, it is also a cue to current China-US tensions. Indeed, this comes after reports in mid-January that China may scale down its Treasury exposure as a form of retaliation to Trump’s protectionist rhetoric, which has in the interim been followed up by concrete measures such as tariffs and the ongoing inquiry into China’s theft of US intellectual property rights. Watch out for Chinese trade retaliation measures against the US (see more in Research – 10 areas where China could retaliate vs US measures , 15 March.
