It’s all quiet on the Western and Eastern fronts as the market sits in suspended animation ahead of Tuesday night’s circus in Washington where Donald Trump will explain to Congress and the nation how great things have been since the inauguration.
As noted earlier on Tuesday, Trump has walked back expectations on tax reform but he has raised the bar on the stimulus front by promising to say something “big league” about infrastructure.
The Bloomberg Dollar Spot Index erased Monday’s gains as “month-end flows speculation weighed ahead of President Donald Trump’s first address to Congress Tuesday.”
Volumes are light, European traders said, and this has “exacerbated moves in the Group-of-10 bloc, while month-end portfolio rebalancing is expected to bring further noise and possibly sizable dollar-selling orders,” Bloomberg wrote this morning, adding that “investors are looking for clarity from Trump’s speech on his tax and infrastructure plans; a protectionism-skewed approach may further pressure the dollar, while signs that health-care reforms will take long to materialize may not bode well with greenback bulls.”
Here’s SocGen’s take on the overnight action:
There was some much-needed relief for beleaguered bond bears yesterday as President Trump expressed a wish for a USD 54bn increase in the Pentagon’s Budget and raised hopes that he would announce ‘something special’ in his speech to both house of Congress this evening (9pm Eastern, 2am GMT). 10year Notes have bounced off 2.30 and the dollar has recovered a little. Not that anyone’s relaxed -Asian equities are mixed, commodity prices likewise, and the dollar drifted back down, notably against the yen, in the hours before the London market opened. The market would like to see the Emperor’s new suit for itself.
As far as equities go, Asia and Europe might as well have just closed shop for the day. Here’s a rundown (Europe current as of pixel time):
- Nikkei up 0.06% to 19,118.99
- Topix up 0.09% to 1,535.32
- Hang Seng Index down 0.8% to 23,740.73
- Shanghai Composite up 0.4% to 3,241.73
- Sensex down 0.3% to 28,728.63
- Australia S&P/ASX 200 down 0.2% to 5,712.22
- Kospi up 0.3% to 2,091.64
- FTSE 7256.60 3.60 0.05%
- DAX 11808.75 -13.92 -0.12%
- CAC 4848.70 3.52 0.07%
- IBEX 35 9546.20 81.90 0.87%
One thing worth noting – if you didn’t see it yesterday – is the (kind of) inexplicable jump in market implied March odds. As Bloomberg recounts, “the odds of an increase next month jumped to 50 percent on Monday, a 10-point increase from Friday [and although] there are plenty of potential triggers for such a shift, analysts say they can’t nail down any one of them as being the prime mover.”
A couple of other notables from the overnight session include (via Bloomberg):
- France’s GDP Expands 0.4% Q/q in 4Q
- GDP rose 1.2% y/y vs flash +1.1% y/y
- Govt spending rose 0.4% q/q; rose 1.5% y/y
- Household spending rose 0.6% q/q; rose 2.1% y/y
- Capital investment rose 0.4% q/q; rose 1.8% y/y
- Exports rose 1.3% q/q; rose 1.9% y/y
- Imports rose 1% q/q; rose 2.9% y/y
- France Flash February Harmonized CPI +1.4% Y/y; Est. +1.7% Y/y
- BOJ Announces Dates for Monthly JGB Purchases for First Time
- BOJ Says It Aims to Cut Excessive Yield Volatility
- Bank of Japan also wants to increase transparency of its operations
- Onshore yuan heads for its first back-to-back monthly gain in almost a year, stabilizing before National People’s Congress in March and U.S. Treasury’s foreign-exchange report the following month
Gold’s down, so’s oil. US futs are flat.