OVERNIGHT MARKETS AND NEWS

Mar E-mini S&Ps (ESH18 unch) this morning are down -0.05% and European stocks are down -0.57% after European manufacturing activity slowed more than expected this month. Losses were contained as the 10-year T-note yield held below 2.90%. The weaker European economic data also knocked the German 10-year bund yield down to a 2-week low of 0.696%. The markets will turn their attention towards today’s minutes of the last FOMC meeting on Jan 30-31. The market is still discounting the odds at 100% for a 25 bp rate hike at next month’s Mar 20-21 FOMC meeting. Asian stocks settled higher: Japan +0.21%, Hong Kong +1.81%, China closed for holiday, Taiwan +2.81%, Australia +0.05%, Singapore +1.14%, South Korea +0.52%, India +0.42%. Japan’s Nikkei Stock Index closed higher due to strength in exporters as USD/JPY climbed +0.11% to a 1-week high and improved the earnings prospects for exporters. Chinese markets remained closed for the last day of the Lunar New Year holiday and will reopen tomorrow.

The dollar index (DXY00 +0.22%) is up +0.19%. EUR/USD (^EURUSD) is down -0.15%. USD/JPY (^USDJPY) is up +0.11% at a 1-week high.

Mar 10-year T-note prices (ZNH18 -0.01%) are up +0.5 of a tick.

The German Feb Markit/BME manufacturing PMI fell -0.8 to 60.3, weaker than expectations of -0.6 to 60.5. The Feb Markit services PMI fell -2.0 to 55.3, weaker than expectations of -0.3 to 57.0.

The Eurozone Feb Markit manufacturing PMI fell -1.1 to 58.5, weaker than expectations of -0.4 to 59.2. The Feb Markit composite PMI fell -1.3 to 57.5, weaker than expectations of -0.4 to 58.4.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) weekly MBA mortgage applications (previous -4.1% with purchase sub-index -5.9% and refi sub-index -1.9%), (2) Feb Markit manufacturing PMI (expected unch at 55.5, Jan +0.4 to 55.5) and Feb Markit services PMI (expected +0.4 to 53.7, Jan -0.4 to 53.3), (3) Jan existing home sales (expected +0.5% to 5.60 million, Dec -3.6% to 5.57 million), (4) Treasury auctions $15 billion 2-year floating-rate notes and $35 billion 5-year T-notes, and (5) minutes of the Jan 30-31 FOMC meeting.