OVERNIGHT MARKETS AND NEWS

Mar E-mini S&Ps (ESH18 -0.38%) this morning are down -0.42% and European stocks are down -1.17% ahead of Fed Chair Powell’s second day of testimony before Congress. His comments on Tuesday roiled the markets as they fueled speculation the Fed may quicken the pace of monetary tightening. The markets are also on edge on U.S. trade concerns after people familiar with the matter said President Trump is set to announce steep tariffs on steel and aluminum imports today. Asian stocks settled mostly lower: Japan -1.56%, Hong Kong +0.65%, China +0.44%, Taiwan -0.27%, Australia -0.71%, Singapore -0.12%, South Korea closed for holiday, India -0.40%. China’s Shanghai Composite recovered from a 1-week low and closed higher after a gauge of Chinese manufacturing activity unexpectedly rose after the Feb Caixin (flash) manufacturing PMI unexpectedly rose +0.1 to a 6-month high of 51.6.

The dollar index (DXY00 +0.21%) is up +0.12% at a 1-1/2 month high on expectations for more hawkish testimony today from Fed Chair Powell. EUR/USD (^EURUSD) is down -0.10% at a 1-1/2 month low. USD/JPY (^USDJPY) is up +0.01%.

Jun 10-year T-note prices (ZNM18 +0.27%) are up +9 ticks.

The China Feb Caixin (flash) manufacturing PMI unexpectedly rose +0.1 to a 6-month high of 51.6, stronger than expectations of -0.2 to 51.3.

The Eurozone Jan unemployment rate was unch at a 9-year low of 8.6%, right on expectations.

The Eurozone Feb Markit manufacturing PMI was revised upward to 58.6 from the previously reported 58.5.

The German Markit/BME manufacturing PMI was revised higher to 60.6 from the previously reported 60.3.

Japan Feb consumer confidence unexpectedly fell -0.4 to a 5-month low of 44.3, weaker than expectations of +0.1 to 44.8.

Japan Q4 capital spending rose +4.3% y/y, stronger than expectations of +3.0% y/y. Q4 capital spending ex-software rose +4.7% y/y, stronger than expectations of +2.7% y/y.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) weekly initial unemployment claims (expected +3,000 to 225,000) vs. previous -7,000 to 222,000 and weekly continuing claims (expected +50,000 to 1.925 million) vs. previous -73,000 to 1.875 million, (2) Jan personal spending (expected +0.2%) vs. Dec +0.4%, (3) Jan personal income (expected +0.3%) vs. Dec +0.4%, (4) Jan PCE deflator (expected +0.4% m/m and +1.7% y/y) vs. Dec +0.1% m/m and +1.7% y/y, (5) Jan core PCE deflator (expected +0.3% m/m and +1.5% y/y) vs.Dec +0.2% m/m and +1.5% y/y, (6) revised-Feb Markit manufacturing PMI (expected -0.1 to 55.8) vs. prelim-Feb +0.4 to 55.9, (7) Fed Chair Powell testifies on Fed’s semi-annual monetary report to Congress before the Senate Banking Committee, (8) Jan construction spending( expected +0.3%) vs. Dec +0.7%, (9) Feb ISM manufacturing index (expected -0.5 to 58.6) vs. Jan -0.2 to 59.1 and Feb ISM prices paid (expected -2.7 to 70.0) vs. Jan +4.3 to 72.7, (10) Feb total vehicle sales (expected 17.15 million) vs. Jan 17.07 million. Feb domestic vehicle sales (expected 13.30 million) vs. Jan 13.10 million.

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