Updated: 02-27-2017

The Market at 03:29PM ET
10-Year: -15/32…2.37…
EUR/USD: 1.0587…
USD/JPY: 112.76…

Moving the Market

  • January Durable Goods Orders: Actual 1.8%, Briefing.com consensus 1.8%, Prior -0.8% (revised from -0.4%)
    • Durable Goods Orders ex-transportation: Actual -0.2%, Briefing.com consensus 0.5%, Prior 0.9%, (revised from 0.5%) 
  • January Pending Home Sales: Actual -2.8%, Briefing.com consensus 0.9%, Prior 0.8% (revised from 1.6%)
  • President Trump's Tuesday speech will have a big statement on infrastructure, according to Reuters
  • Dallas Fed President Kaplan (FOMC voter): There is still slack in the labor market; confident that U.S. growth will be faster than 2% in 2017; even a few hikes this year would leave monpol stance accommodative; hike should be sooner rather than later; neutral rate may be 2.25-2.50%

03:29PM ET

Treasuries Slide as Investors Revise up March Rate Hike Probability

  • U.S. Treasuries sold off sharply today as investors revised up their probabilities for a rate hike at the March 14-15 FOMC meeting. The U.S. economic data was mixed to negative, with pending home sales unexpectedly falling in January and the durable goods orders data slightly missing forecasts. Dallas Fed President Robert Kaplan (FOMC voter) did make some remarks that could be construed as hawkish, saying that even a few rate hikes in 2017 would leave monetary policy accommodative, and that may have helped to induce selling pressure in government bonds. The S&P 500 also stabilized after a worrying wobble late last week and the resumption of its upward path may have led investors to unwind safe-haven positions. The U.S. Dollar Index bounced too from an early decline to add 0.04% at 101.13. President Trump will give a speech to Congress on Tuesday and is expected to talk in more detail about corporate tax cuts and infrastructure spending. The possibility of large fiscal stimulus has Treasury bulls frightened and also contributed to today's drop
  • Yield Check:
    • 2-yr: +6 bps to 1.20%
    • 5-yr: +6 bps to 1.87%
    • 10-yr: +5 bps to 2.37%
    • 30-yr: +3 bps to 2.98%
  • News:
    • U.S. orders for durable goods grew 1.8% m/m in January, matching the Briefing.com consensus. December's change was revised down to -0.8% from -0.4%
      • Durable goods orders excluding transportation fell 0.2% m/m, missing the Briefing.com consensus of +0.5%. December's change was revised up to 0.9% from 0.5%
      • Orders for non-military capital goods excluding aircraft fell 0.4% after rising 1.1% in December    
      • The key takeaway from the report is that the "hard" data indicates business spending declined at the start of the year, which is contradictory of the spending optimism reported in the "soft" survey data
    • U.S. pending home sales fell by 2.8% in January, missing the Briefing.com consensus for growth of 0.9%. December's growth was revised down to 0.8% from 1.6. The year-on-year change in January was 2.7%
      • Sales increased in the Northeast and South but fell in the Midwest and West
    • Dallas Fed President Robert Kaplan (FOMC voter) said that he was confident that U.S. economic growth will exceed 2% in 2017 and said that even a few rate hikes this year would leave monetary policy in an accommodative position. Kaplan said that the Fed should hike sooner rather than later
      • Kaplan said that the neutral rate of interest, which exerts no pressure on economic growth in either direction, may be 2.25-2.50%
  • Commodities:
    • WTI crude: +0.15% to $54.07/bbl.
    • Gold: -0.28% to $1,254.8/troy oz. 
    • Copper: -0.09% to $2.693/lb.
  • Currencies:
    • EUR/USD: +0.24% to 1.0587
    • USD/JPY: +0.52% to 112.78
  • Data out Tomorrow:
    • Q4 GDP and GDP Deflator -- Second Estimate (08:30 ET)
    • February Chicago PMI (09:45 ET)
    • February Consumer Confidence (10:00 ET)
  • Fed Speakers:
    • Kansas City Fed President George (non-FOMC voter) (12:45 ET)
    • San Francisco Fed President Williams (non-FOMC voter) (15:30 ET)
    • St. Louis Fed President Bullard (non-FOMC voter) (18:30 ET)

10-Yr: -15/32… EUR/USD: 1.0587… USD/JPY: 112.76…

03:03PM ET

Dollar Rebounds from Early Losses on Trump Tax Talk

  • The U.S. Dollar Index now trades up 0.05% to 101.14 after reversing from a low of 100.69 as the greenback advances against the Japanese yen and Canadian loonie. U.S. President Trump is slated to give an address to Congress on Tuesday and more details on tax cuts and infrastructure spending are expected so that is helping to support the dollar today. We are reluctant to suppose that there will be much more policy detail tomorrow, but the dollar has been consolidating for some time and could try another stab at the top end of its February range (101.76). The British pound sold off sharply this morning on rumors that Nicola Sturgeon would seek a Scottish independence referendum in March but the pound has since recovered. The euro remained steady above a multi-year low as eurozone economic confidence rose to its highest level in five years
  • EUR/USD: +0.24% to 1.0587
    • The eurozone's Business and Consumer Survey ticked up to 108.0 in February from 107.9 in January, as expected
    • The Business Climate Index remained at 0.8 in February
    • The Consumer Confidence gauge fell to -6.0 from -5.0
    • Household loans in the eurozone grew by 2.2% y/y in January, accelerating from 2.0% growth in December
    • Spain's consumer price index fell 0.3% m/m in February (+3.0% y/y), missing forecasts after a 0.5% decline in January
  • GBP/USD: -0.14% to 1.2442
  • USD/CHF: +0.18% to 1.0094
    • Switzerland's employment level fell to 4.910 million in Q4 from 4.918 million in Q3
  • USD/JPY: +0.55% to 112.81
  • USD/CNY: +0.09% to 6.871 
  • USD/RUB: -0.64% to 58.08
  • USD/TRY: +0.03% to 3.608
  • USD/BRL: -0.06% to 3.109
  • USD/MXN: +0.05% to 19.92 
  • USD/CAD: +0.45% to 1.3151 
  • AUD/USD: +0.10% to 0.7680
    • Australian business inventories rose 0.3% q/q in the fourth quarter after seeing 0.9% growth in Q3
    • Corporate gross operating profits in Australia are up 20.1% q/q in the fourth quarter, beating expectations after 1.5% growth in Q3
  • NZD/USD: -0.01% to 0.7199

10-Yr: -15/32… EUR/USD: 1.0587… USD/JPY: 112.81…

02:08PM ET

Dollar Rebounds on Stimulus Talk

  • Treasuries are still losing ground today as the yields for the 5, 10, and 30-year Treasuries all move up from their 23.6% Fibonacci retracements of the H2 2016 reflation move. The S&P 500 is up by 0.06% to 2,268.8 and the U.S. Dollar Index is unchanged at 101.09. President Trump is set to give a speech on Tuesday night including details on tax reform and infrastructure spending. That announcement has set off some speculation that the U.S. economy will be squeezed closer to full capacity and the Fed will have to hike sooner and faster, thereby attracting capital to the United States. Gold is up by 0.03% to $1,258.7/troy oz. and WTI crude is adding 0.31% at $54.16/bbl.
  • We do need to discuss the fact that Bloomberg and the CME show very different rate hike probabilities for the March 14-15 FOMC meeting. Bloomberg's number is around 50% while the CME's is around 37%. The calculation has become more difficult ever since the Fed began targeting a range (currently 0.50-0.75%) rather than specific level for the Fed funds rate. The rate last night was 0.66%. If you assume that the rate will be 16 basis points above the bottom of the range after another hike (0.91%), then the probability for a March rate hike is 38%
    • Joseph LaVorgna, chief economist at Deutsche Bank, puts the probability at 41%
  • Tanvir Sandhu notes on Bloomberg today that the swap spread for the German 2-year schatz has been widening since the first half of 2016 and the move has accelerated in the beginning of this year
    • One of the reasons for the sharp rally in schatz prices (fall in schatz yields) has been a scarcity of collateral in the repo market. Traders who are short government bonds overnight need to borrow them in the repo market
  • Yield Check:
    • 2-yr: +4 bps to 1.18%
    • 5-yr: +6 bps to 1.86%
    • 10-yr: +5 bps to 2.36%
    • 30-yr: +3 bps to 2.98%

10-Yr: -14/32… EUR/USD: 1.0596… USD/JPY: 112.72…

01:30PM ET

Traders Look Ahead to GDP Revision on Tuesday

  • The U.S. Treasury complex is still moderately lower this afternoon as hawkish remarks from Dallas Fed President Kaplan appeared to push Fed funds futures lower, thereby implying a higher probability of a March rate hike. Robert Kaplan said that he was confident that the U.S. economic growth will exceed 2% in 2017 and he said that even a few rate hikes this year would leave monetary policy in an accommodative position. Kaplan said that the Fed should hike sooner rather than later
    • Kaplan said that the neutral rate of interest, which exerts no pressure on economic growth in either direction, may be 2.25-2.50%
    • These remarks aside, regional Fed presidents have been known to fool investors in the hawkish direction in the past. Fed Governor Brainard is due to speak on Wednesday and Fed Governor Powell will talk on Friday. Fed Chair Yellen and Fed Vice Chair Fischer are also due to speak on Friday, so we should have a clear picture by the end of week regarding how strong the February jobs report will need to be to push the FOMC to vote for a rate hike on March 15
  • The S&P 500 is 0.04% higher at 2,368.3 and the U.S. Dollar Index is down just 0.09% to 101.00. The index had traded as low as 100.69 earlier the session
  • WTI crude is up by 0.31% to $54.16/bbl. and gold is adding 0.11% to $1,259.7/troy oz. after touching a three-month high earlier today
  • Yield Check:
    • 2-yr: +4 bps to 1.19%
    • 5-yr: +6 bps to 1.87%
    • 10-yr: +5 bps to 2.36%
    • 30-yr: +2 bps to 2.98%

10-Yr: -14/32… EUR/USD: 1.0599… USD/JPY: 112.66…

12:39PM ET

Kaplan's Hawkish Remarks Help Treasuries Sell Off

  • The Fed funds futures market has moved decidedly lower over the past hour and that is helping to push the whole Treasury market lower in a curve-flattening trade. The S&P 500 is down just 0.01% to 2,367 and WTI crude is adding 0.46% to $54.24/bbl. Gold is up 0.35% to $1,262.7/troy oz. while the U.S. Dollar Index is losing 0.21% to 100.88
    • The April Fed funds futures contract is trading at 99.255, indicating an expected average Fed funds rate over the month of 0.745%
      • If we assume that the rate would be at 99.357% without a hike and 99.107% with the hike, that gives us a rate hike probability of 40.8%
  • In the latest volley in the war against real media outlets, President Trump has passed bullet points on Tuesday's speech to Infowars. The summary appears to say very little and there are no hard numbers on infrastructure or taxes
  • Yield Check:
    • 2-yr: +3 bps to 1.18%
    • 5-yr: +4 bps to 1.85%
    • 10-yr: +3 bps to 2.35%
    • 30-yr: +2 bps to 2.97%

10-Yr: -10/32… EUR/USD: 1.0611… USD/JPY: 112.22…

11:41AM ET

 Dallas Fed President Speaks

  • Treasuries are still trading with narrow losses today as the U.S. Dollar Index loses 0.32% at 100.77. The S&P 500 is down 0.02% to 2,366.8 and WTI crude is up 0.37% to $54.19/bbl. Gold has extended its gain to 0.48% at $1,264.3/troy oz.
  • Dallas Fed President Robert Kaplan said today that he expects that U.S. real GDP growth will exceed 2% in 2017 and that there is still slack in the labor market. Kaplan votes this year
    • Kaplan went on to say that even a few rate hikes this year would leave monetary policy with an accommodative stance
    • We take "a few" to mean at least three because otherwise Kaplan probably would have said "a couple." Nevertheless, Kaplan is not the one who needs to be convinced for the FOMC to vote to hike rates for the third time since the financial crisis. Chicago Fed President Evans, Minneapolis Fed President Kashkari, and Fed Governors Brainard and Tarullo  are on the dovish end of the committee
  • The Atlanta Fed's GDPNow model forecast for Q1 U.S. real GDP growth is 2.5%, up from 2.4% on February 16
    • The forecast for first-quarter real residential investment growth increased from 7.8% to 10.8% after the housing data releases last week
    • The New York Fed's nowcast is forecasting 3.1% for Q1 growth
  • Gavyn Davies, former chief economist at Goldman Sachs, wrote in his weekly piece about the sharp decline in "secular stagnation" discussion as the "reflation" theme moves into the driver's seat for financial markets
    • While noting that inflation expectations have moved sharply higher since the middle of 2016, Davies also writes that the global economy is far from proving that the supply side of the economy can overcome "falling productivity growth and slowing growth in the labour force"
    • Full read here
  • Get caught up on your Julius Caesar because the March 15 FOMC rate decision is coming into focus and the media is showing little restraint. The "beware the Ides of March" jokes are going to start flowing very quickly as we approach the meeting. At the January FOMC meeting, the committee decided to extend the blackout period for Fed speakers through the whole week prior to FOMC meetings. The previous blackout period had been only the seven days before the start of the meeting, leaving open the Sunday and Monday of the week before the meeting for Fed officials to make public remarks. The implied probability for a hike is 27%, according to the CME website
  • Yield Check:
    • 2-yr: +2 bps to 1.16%
    • 5-yr: +2 bps to 1.83%
    • 10-yr: +2 bps to 2.33%
    • 30-yr: +1 bp to 2.96%

10-Yr: -6/32… EUR/USD: 1.0618… USD/JPY: 112.10…

11:35AM ET

Trump to Capitol Hill; Beige Book, Yellen, Fisher on Tap: The Dollar Index is sliding below the 101 level as we prepare for March. This week we will get the usual run of key data including the Personal Income & Spending and the ISM Services on Wednesday. Of note, due to the current cycle, the February jobs number is not released until March 10. President Trump is heading to Capitol Hill tomorrow but expectations are for him to remain vague on details of his fiscal plans. This week we will also get the latest Beige Book (Wed) and speeches from Fed Chair Janet Yellen and number two Stanley Fischer (Fri). This will help set the tone ahead of the Fed's March 15 meeting.

  • The euro is attempting to press back above the 1.06 level. Yields in the region have eased as the most recent French polls are showing Left candidate Emmanuel Macron beating Marine Le Pen in the second round of the French elections. This has always been the case but it would appear there has been an easing on some of the concerns around a Le Pen victory. The single currency will need to hold the 50-sma/1.06 area will be key.
  • The pound is attempting to hold the 1.24 level to start off the week. Sterling came under pressure late last week as stories of the E.U. tagging the U.K. with EUR 62 bln exit bill have led to concerns over future trade talks. March will hold two EU meetings (March 10 and 25) and the U.K. is expected to invoke its Article 50 departure at one of the meetings.
  • The yen is testing the 112 area for resistance. The 100-sma (111.84) is lining up as a key level for the yen. Yen has rallied approx 5% in 2017 despite the global market rally.
  • The yuan is holding steady in the 6.85 area. Over the weekend there was a story out that China approved hedging tools including FX forwards, FX swaps and currency swaps for foreign investors in China's interbank bond markets as it attempts to lure capital back.

10-Yr: -08/32… EUR/USD: 1.0620… USD/JPY: 112.03…

10:56AM ET

Stocks Trade to Highs

  • Treasuries are still losing ground today as the S&P 500 recovers from an early loss to add 0.05% at 2,268.6. The U.S. Dollar Index is down 0.16% to 100.93 and gold is up 0.16% to $1,260.3/troy oz.
  • Tuesday's session will feature the second official estimate of Q4 GDP growth in the U.S., but the biggest day for data this week is Wednesday. Personal income/spending, auto sales, ISM Manufacturing, and construction spending data are all due out on Wednesday
  • The Dallas Fed's manufacturing index rose to 24.5 in February from 22.1 in January. Economists had expected a decline
  • Today is the 10-year anniversary of the "Shanghai Swoon," the sharp decline in Chinese stocks that greeted U.S. traders on the morning of February 27, 2007. It was the first of many market shocks to the global financial system that would go on for roughly five years, if you count the eurozone crisis
  • Yield Check:
    • 2-yr: +2 bps to 1.17%
    • 5-yr: +3 bps to 1.83%
    • 10-yr: +3 bps to 2.34%
    • 30-yr: +2 bps to 2.97%

10-Yr: -8/32… EUR/USD: 1.0606… USD/JPY: 112.17…

10:05AM ET

Markets Trade Sideways

  • Treasuries are still in negative territory today after U.S. pending home sales fell by 2.8% in January, missing the Briefing.com consensus for growth of 0.9%. December's growth was revised down to 0.8% from 1.6. The year-on-year change in January was 2.7%
    • Sales increased in the Northeast and South but fell in the Midwest and West
  • The S&P 500 is losing 0.08% to 2,365.3 and the U.S. Dollar Index is off by 0.09% to 101.00
  • WTI crude is up 0.41% to $54.21/bbl. and gold is 0.02% higher at $1,258.5/troy oz.
  • Here is a rather evenhanded analysis of Kevin Hassett at Vox, set to be the chair of the Council of Economic Advisors. Hassett is generally in favor of free trade, an opinion likely to be ignored by a president who ran against free trade during the campaign. On corporate taxes, Hassett is as passionate as any conservative economist about the merits of cutting. His justification, however, comes from the view that the burden of the tax falls mostly on workers, a point that is contentious to say the least. The Congressional Budget Office estimates that 75% of the corporate income tax is paid by capital
  • Bloomberg has a primer on President Trump's upcoming address to Congress on Tuesday. While investors are saying that they would like specifics on economic policy, particularly tax reform, legislation has to make its way through Congress. Furthermore, many experts say that Affordable Care Act repeal/replace must happen before tax reform because of the rules governing the budget reconciliation process. So while investors may be trying to get further guidance on tax cuts, looking to Trump is probably not the way to go
    • Here is Mohamed El-Erian from Allianz, discussing the importance of Tuesday's speech
    • Reuters just reported that there will be a big statement on infrastructure spending in Tuesday's speech. The word from the White House last week was that infrastructure would be a 2018 project, so this remains in flux
  • Yield Check:
    • 2-yr: +1 bp to 1.16%
    • 5-yr: +2 bps to 1.83%
    • 10-yr: +2 bps to 2.34%
    • 30-yr: +1 bp to 2.96%

10-Yr: -7/32… EUR/USD: 1.0596… USD/JPY: 112.35…

09:12AM ET

Traders Await Pending Home Sales

  • US. Treasuries have rebounded after an early sell-off and are now managing just minor losses ahead of the open for U.S. stocks on Wall Street. The S&P 500 is set to lose 0.09% to 2,364.9 and the U.S. Dollar Index is now down 0.12% to 100.97. WTI crude is up 0.81% to $54.43/bbl. and gold is down 0.09% to $1,257.2/troy oz.
  • Looming corporate tax reform has led many U.S. companies to issue debt in the hope that any elimination of the deductability of interest payments will exclude preexisting debt. Issuance of investment-grade debt has totaled more than $230 bln during the first six weeks of 2017, blowing through the prior record of $185 bln in 2009.  More from Bloomberg
  • The Trump Administration is seeking to bypass the World Trade Organization's dispute settlement system
    • The Financial Times reported on Sunday that administration officials have asked the U.S. Trade Representative's office to "draft a list of the legal mechanisms that Washington could use to level trade sanctions unilaterally against China and other countries."
  • Yield Check:
    • 2-yr: +1 bp to 1.16%
    • 5-yr: +1 bp to 1.82%
    • 10-yr: +2 bps to 2.33%
    • 30-yr: +1 bp to 2.96%

10-Yr: -4/32… EUR/USD: 1.0599… USD/JPY: 112.28…

08:44AM ET

Durable Goods Orders Match on Headline, Ex-Trans Misses

  • U.S. Treasuries are falling a bit further this morning after orders for durable goods reportedly grew 1.8% m/m in January, matching the Briefing.com consensus. December's change was revised down to -0.8% from -0.4%
    • Durable goods orders excluding transportation fell 0.2% m/m, missing the Briefing.com consensus of +0.5%. December's change was revised up to 0.9% from 0.5%
    • Orders for non-military capital goods excluding aircraft fell 0.4% after rising 1.1% in December
  • The S&P 500 is set to open down 0.10% to 2,364.9 and the U.S. Dollar Index is down 0.03% to 101.06
  • WTI crude is adding 0.93% to $54.49/bbl. and gold is off by 0.19% to $1,255.9/troy oz.
  • Yield Check:
    • 2-yr: +2 bps to 1.16%
    • 5-yr: +3 bps to 1.84%
    • 10-yr: +2 bps to 2.34%
    • 30-yr: +1 bp to 2.97%

10-Yr: -8/32… EUR/USD: 1.0592… USD/JPY: 112.39…

08:23AM ET

Eurozone Periphery Yields Decline

  • Sovereign debt yields in the eurozone periphery are trading lower this morning as French election worries ease and European equities seek direction following their Thursday/Friday sell-off. The economic data from the eurozone continues to show strong sentiment among businesses and consumers but the gains in actual activity are still painfully slow. Spanish consumer price inflation ran at a four-year high of 3.0% y/y in January, but the year-on-year figures are flattered by very low oil prices in February 2016. Policymakers at the European Central Bank and many economists expect inflation to subside as energy prices stabilize. French and Italian inflation data for January are due out on Tuesday 
  • New Issuance:
    • Italy sold EUR4.0 bln of 5-year BTPs at a gross yield of 1.11% with a bid-to-cover of 1.25
    • Italy tapped a 10-year BTP with nine years of residual maturity for EUR1.0 bln with a bid-to-cover of 1.74
    • Italy sold EUR2.0 bln of 10-year BTPs at a gross yield of 2.28% with a bid-to-cover of 1.41
  • European Economic Data:
    • The eurozone's Business and Consumer Survey ticked up to 108.0 in February from 107.9 in January, as expected
    • Household loans in the eurozone grew by 2.2% y/y in January, accelerating from 2.0% growth in December
      • Loan growth to non-financial businesses grew by 2.3% y/y
    • The eurozone's broad money supply, as measured by M3, rose 4.9% y/y in January, accelerating from December's 4.8% growth rate
    • Spain's consumer price index fell 0.3% m/m in February (+3.0% y/y), missing forecasts after a 0.5% decline in January
      • Spain's harmonized index of consumer prices also fell 0.3% m/m (+3.0% y/y), matching expectations after a 1.0% drop in January
    • Italy's non-EU trade balance swung to a deficit of EUR0.89 bln in January from a surplus of EUR5.67 bln in December
    • Switzerland's employment level fell to 4.910 million in Q4 from 4.918 million in Q3
    • Hungary's unemployment rate fell to 4.3% in January from 4.4% in December, as expected
  • Yield Check:
    • France, 10-yr OAT: -1 bp to 0.91%
    • Germany, 10-yr bund: +1 bp to 0.20%
    • Greece, 10-yr note: -6 bps to 7.02%
    • Italy, 10-yr BTP: -2 bps to 2.15%
    • Portugal, 10-yr PGB: -4 bps to 3.87%
    • Spain, 10-yr ODE: -3 bps to 1.57%
    • U.K., 10-yr gilt: unch at 1.08%

10-Yr: -5/32… EUR/USD: 1.0584… USD/JPY: 112.41…

07:34AM ET

Treasuries Dip Ahead of Durable Goods 

  • U.S. Treasuries are starting the week with minor losses after an overnight session light on international economic data. An index of overall economic sentiment in the eurozone ticked up to a nine-year high in February, driven higher by strength in France and Spain while the mood in Germany soured. Loan growth accelerated to 2.2% y/y in the eurozone last month and Spanish consumer price inflation remained at 3.0% y/y. Strength in inflation barometers is an artifact of the February 2016 low in oil prices. The year-on-year comparisons will become more difficult as we go through the year, assuming that oil prices do not jump sharply. WTI crude is 0.76% higher this morning at $54.40/bbl. and gold is down 0.21% to $1,255.6/troy oz. The S&P 500 is set to open down 0.09% to 2,365.2 and the U.S. Dollar Index is off by 0.01% to 101.08. The British pound fell as low as $1.2382 this morning on reports that Scotland's first minister, Nicola Sturgeon, might call another Scottish independence vote in March. The pound is currently losing 0.37% at $1.2412
  • Yield Check:
    • 2-yr: +1 bp to 1.16%
    • 5-yr: +1 bp to 1.82%
    • 10-yr: +2 bps to 2.33%
    • 30-yr: unch at 2.96%
  • International News:
    • The eurozone's Business and Consumer Survey ticked up to 108.0 in February from 107.9 in January, as expected
      • The Business Climate Index remained at 0.8 in February
      • The Consumer Confidence gauge fell to -6.0 from -5.0
      • Services Sentiment rose to 14.0 from 13.0
      • Industrial Sentiment climbed to 1.0 from 0.8
      • On a national basis, France and Spain showed strength while Germany fell to a four-month low
    • Household loans in the eurozone grew by 2.2% y/y in January, accelerating from 2.0% growth in December
      • Loan growth to non-financial businesses grew by 2.3% y/y
    • Spain's consumer price index fell 0.3% m/m in February (+3.0% y/y), missing forecasts after a 0.5% decline in January
      • Spain's harmonized index of consumer prices also fell 0.3% m/m (+3.0% y/y), matching expectations after a 1.0% drop in January
    • Italy's non-EU trade balance swung to a deficit of EUR0.89 bln in January from a surplus of EUR5.67 bln in December
    • Switzerland's employment level fell to 4.910 million in Q4 from 4.918 million in Q3
  • Data out Today:
    • January Durable Goods Orders and Durable Goods Orders ex-transportation (08:30 ET)
    • January Pending Home Sales (10:00 ET)
  • Fed Speaker:
    • Dallas Fed President Kaplan (FOMC voter) (11:00 ET)

10-Yr: -7/32… EUR/USD: 1.0584… USD/JPY: 112.29…

03:03PM ET

Treasuries Jump as Traders Ditch Risk

  • U.S. Treasuries traded sharply higher today as global equities declined and the Japanese yen rallied. Government bonds did not just rally in the U.S. but also in Europe and Japan, where the 10-year JGB yield touched a one-month low of 0.04% (prices move inversely to yields). The U.S. economic data was sparse but new home sales did run cooler than expected in January. Gary Cohn, economic adviser to President Trump, told a meeting of CEOs this morning that the White House does not support House Republican's border tax plan. Also from Washington, Kevin Hassett is set to be the next head of the President's Council of Economic Advisers, a committee that was going the way of the dodo as of last week. The S&P 500 is now down by 0.20% to 2,359 after falling as low as 2,352.6 early in the session. The U.S. Dollar Index is up 0.02% to 101.07
  • Yield Check:
    • 2-yr: -4 bps to 1.15%
    • 5-yr: -5 bps to 1.81% 
    • 10-yr: -6 bps to 2.31%
    • 30-yr: -6 bps to 2.95%
  • News:
    • The Commerce Department reported that new home sales rose 3.7% to a 555K annualized rate in January. The Briefing.com consensus was 566K and December's pace was 535K
      • All regions saw increased sales except for The West, down by 4.4%
      • Supply remained at 5.7 months' of sales or 265K, the highest level in seven years
      • The median selling price was up 7.5% to $312,900
    • The University of Michigan's Consumer Sentiment Index was finalized at 96.3 for February, better than both the Briefing.com consensus of 95.8 and the second estimate of 95.7. January's reading was 98.5
      • The Expectations Index was revised up to 86.5 from 85.7
      • The Current Conditions Index was revised up to 111.5 from 111.2
      • Long-term inflation expectations are steady at 2.5%
  • Commodities:
    • WTI crude: -0.81% to $54.01/bbl.
    • Gold: +0.60% to $1,258.9/troy oz.
    • Copper: 
  • Currencies:
    • EUR/USD: -0.16% to 1.0567
    • USD/JPY: -0.65% to 111.97
  • Week Ahead:
    • Monday: January Durable Goods Orders and Durable Goods Orders ex-transportation (08:30 ET); January Pending Home Sales (10:00 ET); Dallas Fed President Kaplan (FOMC voter) (11:00 ET)
    • Tuesday: Q4 GDP and GDP Deflator -- Second Estimate (08:30 ET); February Chicago PMI (09:45 ET); February Consumer Confidence (10:00 ET); Kansas City Fed President George (non-FOMC voter) (12:45 ET); San Francisco Fed President Williams (non-FOMC voter) (15:30 ET); St. Louis Fed President Bullard (non-FOMC voter) (18:30 ET)
    • Wednesday: MBA Mortgage Index for the week ending 2/25 (07:00 ET); January Personal Income, Personal Spending, and PCE Prices (08:30 ET); January Construction Spending (10:00 ET); February ISM Manufacturing Index (10:00 ET); Crude Inventories for the week ending 2/25 (10:30 ET); Dallas Fed President Kaplan (FOMC voter) (12:30 ET); February Auto and Truck Sales (14:00 ET); March Beige Book (14:00 ET)
    • Thursday: February Challenger Job Cuts (07:30 ET): Initial Jobless Claims for the week ending 2/25 and Continuing Jobless Claims for the week ending 2/18 (08:30 ET); Natural Gas Inventories for the week ending 2/18 (10:30 ET); Cleveland Fed President Mester (non-FOMC voter) (19:00 ET)
    • Friday: February ISM Services (10:00 ET); Chicago Fed President Evans (FOMC voter) (10:15 ET); Richmond Fed President Lacker (non-FOMC voter, retiring this year) (10:15 ET); Fed Vice Chair Fischer (FOMC voter) (12:00 ET); Fed Chair Yellen (FOMC voter) (13:00 ET)

10-Yr: +17/32… EUR/USD: 1.0567… USD/JPY: 111.97…

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