Headlines:
- Calmer mood in markets, at least for the time being
- The landmines ahead of the FOMC policy meeting decision later this month
- ECB's Visco: Monetary policy should be guided by data as it becomes available
- ECB's Visco: I do not appreciate colleagues' statements on prolonged rate hikes
- BOE's Dhingra: Overtightening poses a more material risk at this point
- Germany January retail sales -0.3% vs +2.0% m/m expected
- Germany January industrial production +3.5% vs +1.4% m/m expected
- Eurozone Q4 final GDP 0.0% vs +0.1% q/q second estimate
- US MBA mortgage applications w.e. 3 March +7.4% vs -5.7% prior
Markets:
- AUD leads, CHF lags on the day
- European equities mixed; S&P 500 futures down 0.1%
- US 10-year yields down 1.1 bps to 3.963%
- Gold flat at $1,814.53
- WTI crude down 0.5% to $77.22
- Bitcoin down 0.1% to $22,030
It was a quieter session as markets resorted to a calmer mood, following the volatile moves from Fed chair Powell's hawkish remarks yesterday.
The bond market remains fairly mixed, with yields rising at the short-end while falling slightly at the long-end. That is similar to the initial reaction to yesterday's main event, with the short-end selling off on fears of rates staying higher for longer. Meanwhile, the long-end was bid arguably on fears of a deeper recession amid the same narrative.
Equities are also looking fairly tentative with major currencies also reflecting a more or less similar mood. The aussie and kiwi are mildly higher after a sharp drop in trading yesterday while other currencies are little changed against the dollar today.
USD/JPY did trade to as high as 137.90 in Asia but has seen gains dissipate to 137.25 currently amid the pullback in long-end yields.
It seems like even with Powell's nod, markets are waiting on the next big data to move. We won't have to wait long though, as the US ADP employment report is coming up next - even if it has not had a good track record of predicting Friday's jobs report in recent times.
I would even go so far to say that it is like a game of roulette in predicting the ADP number these days.
