OVERNIGHT MARKETS AND NEWS

Mar E-mini S&Ps (ESH18 -0.61%) this morning are down -0.72% at a 2-week low on concern a stronger-than-expected U.S. Jan payroll report this morning could prompt the Fed into a faster pace of tightening. The 10-year T-note yield climbed to a new 3-3/4 year high of 2.799% in overnight trade. Threats of higher interest rates are also weighing on European stocks that are down -1.12% at a 4-week low. The 10-year German bund yield jumped to a 2-1/3 year high of 0.752% on hawkish comments from ECB Executive Board member Coeure who said, “a reappraisal of investors’ view about future risks to global inflation may cause a correction of global risk premia.” Asian stocks settled mostly lower: Japan -0.90%, Hong Kong -0.12%, China +0.44%, Taiwan -0.30%, Australia +0.51%, Singapore -0.49%, South Korea -1.90%, India -2.34%. In a response to rising Japanese bond yields, the BOJ offered to buy 10-year notes at a fixed rate of 0.11% as bond yields rose above their 0.10% target. It was the first time since July the BOJ expanded its bond purchases and dampened speculation the BOJ was moving closer to ending QE. China’s Shanghai Composite rebounded from a 3-1/2 week low and erased losses in the final hour of trading on speculation state-sponsored funds entered the market to buy stocks.

The dollar index (DXY00 +0.20%) is up +0.20%. EUR/USD (^EURUSD) is down -0.17%. USD/JPY (^USDJPY) is up +0.43% at a 1-week high after the BOJ offered to buy an unlimited amount of bonds at a fixed rate for the first time since July, which undercut the yen.

Mar 10-year T-note prices (ZNH18 -0.05%) are down -3 ticks at a new contract low.

ECB Executive Board member Coeure said, “from a financial stability perspective, a low inflation risk premium may be a matter of concern if it indicates complacency about future adjustments.”

Eurozone Dec PPI of +0.2% m/m and +2.2% y/y was slightly weaker than expectations of +0.2% m/m and +2.3% y/y.