{"id":1457490,"date":"2024-02-15T13:15:54","date_gmt":"2024-02-15T18:15:54","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1457490"},"modified":"2024-02-15T13:15:54","modified_gmt":"2024-02-15T18:15:54","slug":"futures-rise-ahead-of-flood-of-economic-data","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/futures-rise-ahead-of-flood-of-economic-data\/1457490\/","title":{"rendered":"Futures Rise Ahead Of Flood Of Economic Data"},"content":{"rendered":"

Futures Rise Ahead Of Flood Of Economic Data <\/span><\/p>\n

\n

Tuesday’s post-hot CPI <\/em>dump now seems like a distant bad dream as US equity futures continued their rebound, following a tech fueled rally on Wednesday that drove the S&P 500 back above 5,000. As of 8:05am, S&P 500 futures were up 0.1%, also approaching pre-CPI levels; Nasdaq futures were as usual even stronger, rising 0.2% Europe\u2019s Stoxx 600 index surged to the highest in more than a month.\u00a0 WTI crude oil futures are down 0.8% on heels of 1.6% drop Wednesday, following a bearish report by the IEA which predicts lower demand growth than supply growth in 2024. Today\u2019s macro focus is on Retail Sales and Jobless data amid the barrage of data which includes import\/export price indexes, Empire State manufacturing and Philadelphia Fed business outlook surveys, January industrial production, December business inventories, February NAHB housing market index and December TIC flows. A weaker print in retail sales – which our preview suggested is coming <\/a>– and claims may continue the rally in bonds, potentially pushing the Equity rotation that began last week (paused with CPI) farther. There are also three Fedspeakers today.<\/p>\n

<\/a><\/p>\n

In premarket trading, Cisco fell 4% after the maker of computer networking equipment slashed its full-year forecast, and announced it would lay off 5% of its workforce, prompting more questions about this chimeric earnings renaissance thanks to AI which has yet to come. Here are some other notable premarket movers:<\/p>\n

Albemarle falls 4% after the lithium producer gave pricing guidance that disappointed Wall Street.
\n\tAppLovin jumps 22% after the mobile app marketing platform reported robust fourth-quarter earnings.
\n\tFastly falls 21% after the infrastructure software company gave a revenue forecast that was weaker than expected.
\n\tJFrog jumps 18% after the software development company reported fourth-quarter results that beat expectations.
\n\tManchester United falls 15% as the Friday deadline for billionaire Jim Ratcliffe\u2019s tender offer nears.
\n\tNu Skin plummets 24% after the beauty and wellness company failed to meet first-quarter revenue guidance expectations and cut its quarterly dividend.
\n\tParamount Global slips 4% after a filing from Berkshire Hathaway showed the firm had reduced its stake in the media company.
\n\tSoundHound AI soars 84% after Nvidia filed a 13F indicating that it holds a stake in the company. The chipmaker also disclosed a stake in Nano-X Imaging and Recursion Pharmaceuticals.
\n\tNano-X Imaging +56%, Recursion Pharmaceuticals (RXRX) +21%
\n\tTwilio slides 11% after the software company issued first-quarter revenue guidance that was slightly weaker than anticipated.
\n\tYeti declines 12% after its adjusted earnings per share forecast for the year missed the average analyst estimate.<\/p>\n

Wednesday\u2019s powerful rebound, fueled by a wave of dip buyers, <\/strong>showed that investors should avoid making hasty conclusions on the back of a single data point, according to\u00a0Julian Emanuel, chief equity strategist at Evercore ISI.<\/p>\n

\u201cThe clear implication of what we\u2019ve seen in the last few days is don\u2019t trade the numbers,\u201d Emanuel said in an interview with Bloomberg TV. \u201cIf you traded CPI after the number, you\u2019re already far underwater given the bounceback we had yesterday. Thinking about the last 40 years you make money by buying pullbacks.\u201d<\/strong><\/p>\n

To be sure, mostly favorable earnings reports have been a boon for investors hammered by Tuesday\u2019s hotter-than-expected US\u00a0inflation\u00a0reading and disappointed they may have to wait longer for interest rate cuts.\u00a0 Treasuries also rebounded as investors braced for more economic\u00a0reports\u00a0that could help determine the Federal Reserve\u2019s rate path. Data due later include initial jobless claims, industrial production and retail sales which BofA’s card spending data suggests will be a big miss to expectations.<\/p>\n

\u201cThe \u2018hot\u2019 inflation data do not change our base case for a soft landing,\u201d said\u00a0Solita Marcelli\u00a0at UBS Global Wealth Management. \u201cBut we are continuing to monitor the incoming data and the start of rate cuts could be delayed should the economic prints remain strong.\u201d<\/p>\n

European stocks rose for a second day, with the Stoxx trading at session highs up 0.9%, although the FTSE 100 has struggled to keep pace after the UK\u00a0slipped\u00a0into a mild recession in the second half of 2023.\u00a0 European bourses were sharply higher, with autos leading the gains, buoyed by Stellantis\u2019 buyback announcement, while energy stocks are the biggest laggards. Here are the biggest European movers:<\/p>\n

Stellantis shares\u00a0rise as much as 4.9%. Bernstein says the carmaker\u2019s planned \u20ac3 billion share buyback program and its higher dividend are \u201cencouraging.\u201d
\n\tPernod Ricard shares\u00a0rise as much as 6.3% after the cognac maker\u2019s 1H recurring operating income met estimates, while it posted a lower-than expected decline in organic growth.
\n\tDSM-Firmenich shares\u00a0rise as much as 15% after the specialty chemicals company announced plans to separate its Animal Nutrition & Health and posted a 4Q Ebitda beat.
\n\tLegrand shares\u00a0gain as much as 4.4% after the French electrical devices manufacturer posted another solid set of results, with free cash flow as the highlight, according to Morgan Stanley.
\n\tGenmab shares\u00a0surge as much as 12%, the most intraday since March 2020, after the Danish biotech firm reported results and said it will repurchase up to 190,000 shares.
\n\tRenault shares\u00a0rise as much as 5.1% after the French car company generated far more cash than expected, allowing it to bolster its balance sheet and hike its dividend.
\n\tCentrica shares\u00a0gain 6.1% after the UK utility reported results which analysts said were boosted by strength in the commodity-exposed Energy division, although otherwise in line.
\n\tTomra shares\u00a0surge as much as 26%, the most since Dec. 1993, following a \u201csolid\u201d \u00a0fourth-quarter beat by the Norwegian recycling systems maker.
\n\tKerry Group shares\u00a0fall as much as 6.1%, the most in almost two years, after the ingredients company missed expectations in 2023 and issued disappointing guidance for the year ahead.
\n\tGecina shares\u00a0fall as much as 5.5% following results that saw an acceleration in the decline of property valuations.
\n\tVerallia shares\u00a0drop as much as 3% after fourth-quarter results that Citi says missed expectations, as continued destocking offset pricing increases by the glass bottle manufacturer.
\n\tEmbracer shares\u00a0slump as much as 14% after the video-game company said it\u2019s unlikely to reach its net debt reduction target by end of March.<\/p>\n

Earlier in the session, Asian stocks rose with Japan stocks shaking off worse-than-expected GDP numbers and Hong Kong overcomes early declines.\u00a0 The Aussie slips and bonds rise after a lower-than-forecast jobs number. Hong Kong\u2019s tech gauge leads the city\u2019s gainers, rising 0.6%. In Japan, the Nikkei adds 1% and is rapidly approaching its all time high set in 1989 even as a recession strikes…<\/p>\n

<\/a><\/p>\n

… while the Topix underperforms, climbing 0.2%. Indonesia\u2019s stocks rise as Prabowo Subianto looks poised to win the nation\u2019s election.\u00a0 In currencies, the Aussie dips to the day\u2019s low of 64.78 US cents while the yen rises slightly, adding 0.2% after the nation\u2019s GDP contracted versus an expected gain. JGBs rise.<\/p>\n

In FX, the Bloomberg dollar index dropped, while the concurrent slide of two major G-10 countries in recession had opposite effects on their currencies: Japan’s yen shrank while the pound slumped, and was the weakest G-10 currency, falling 0.1% versus the greenback. The yen climbed for a second day, paring some of the US CPI-induced weakness earlier this week that spurred verbal warnings from Japanese authorities. The Aussie steadied following an earlier dip driven by soft jobs data, which brought forward RBA rate cut bets. The yen fluctuated earlier after data showed Japan\u2019s gross domestic product contracted at an annualized pace of 0.4% in the final three months of last year, shrinking for a second quarter and prompting some BOJ watchers to push back bets on when the negative interest rate policy will end<\/p>\n

\u201cWith verbal interventions from the authorities, concerns about the real action prevail in the market, making it hard for market players to test the dollar-yen\u2019s upside,\u201d said Tsutomu Soma, a bond and currency trader at Monex Inc. \u201cHowever, the downside is also limited to some extent because even if the BOJ scraps negative rate policy, wide yield gap still remains as it will be very cautious to lift the rate from zero.\u201d<\/p>\n

In rates, treasuries rise as investors look ahead to a busy US data calendar that includes retail sales and industrial production. Gains for Treasury futures during Asia session and European morning trim yields by 2bp to 4bp across the curve and leave 2s10s, 5s30s spreads slightly flatter on the day, as the surge in yields sparked by January CPI data Tuesday drew dip-buyers and continues to be unwound. 10-year TSY yields are around 4.225% is ~3bp richer on the day, outperforming bunds and gilts in the sector by ~1bp; <\/strong>front-end Treasuries lag slightly, flattening 2s10s, 5s30s spreads by 1bp and 0.5bp on the day, partially unwinding Wednesday\u2019s steepening move. US session features a heavy economic data calendar including retail sales, weekly jobless claims and industrial production.<\/p>\n

In commodities, oil prices decline, with WTI falling 0.7% to trade near $76.10. Spot gold adds 0.2%. Bitcoin rises ~1% to trade above $52,000. \u00a0<\/p>\n

Bitcoin\u00a0(+0.9%), continues its advances, but has so far found resistance around the $52.5k level.\u00a0Ethereum\u00a0currently just shy of USD 2.8k. Bitcoin ETF inflows continued apace if modestly off yesterday’s record high.<\/p>\n

<\/a><\/p>\n

Finally looking to the day ahead, in terms of US data we get January retail sales and import\/export price indexes, February Empire State manufacturing and Philadelphia Fed business outlook surveys and weekly jobless claims data (8:30am), January industrial production (9:15am), December business inventories, February NAHB housing market index (10am) and December TIC flows (4pm).\u00a0 <\/strong>Elsewhere, we got UK Q4 GDP (which unexpectedly joined Japan in sliding into recession), Eurozone December trade balance, Canada January housing sales and December manufacturing sales. We will be hearing from the ECB\u2019s Lane and Nagel, and the BoE\u2019s Greene and Mann. Finally, earning releases include Applied Materials, Deere, Stellantis, DoorDash, DraftKings, and Roku.<\/p>\n

Market Snapshot<\/strong><\/p>\n

S&P 500 futures\u00a0up 0.1% to 5,025.00
\n\tSTOXX Europe 600\u00a0up 0.5% to 487.85
\n\tMXAP\u00a0up 0.9% to 169.07
\n\tMXAPJ\u00a0up 1.0% to 516.53
\n\tNikkei\u00a0up 1.2% to 38,157.94
\n\tTopix\u00a0up 0.3% to 2,591.85
\n\tHang Seng Index\u00a0up 0.4% to 15,944.63
\n\tShanghai Composite\u00a0up 1.3% to 2,865.90
\n\tSensex\u00a0up 0.3% to 72,033.24
\n\tAustralia S&P\/ASX 200\u00a0up 0.8% to 7,605.72
\n\tKospi\u00a0down 0.3% to 2,613.80
\n\tGerman 10Y yield\u00a0little changed at 2.32%
\n\tEuro\u00a0little changed at $1.0735
\n\tBrent Futures\u00a0little changed at $81.55\/bbl
\n\tBrent Futures\u00a0little changed at $81.53\/bbl
\n\tGold spot\u00a0up 0.1% to $1,994.80
\n\tU.S. Dollar Index\u00a0down 0.10% to 104.62<\/p>\n

Top Overnight News<\/strong><\/p>\n

Japan\u2019s Q4 GDP falls short as the country unexpectedly slips into recession (GDP in Q4 came in -0.4% vs. the Street +1.1%). RTRS \u00a0
\n\tTSMC surged the most in more than three years on AI prospects, propelling Taiwan\u2019s benchmark index to a record. BBG
\n\tWhile most containerships are making detours around the conflict-affected Red Sea, experts say container freight rates, which had initially soared, are showing signs of easing. “We believe that the worst is behind us,” said Philip Damas, managing director at British maritime research consultancy Drewry. “Now we are into a second phase where it will be easier for exporters to manage and organize, and also where the spot rates are going to come down significantly after the early phase.” Nikkei
\n\tECB\u2019s Lagarde says inflation is moving in the right direction, but the central bank requires additional data before implementing rate cuts. RTRS
\n\tUK economy falls into recession in 2nd half of 2023, with Q4 GDP undershooting expectations (-0.3% vs. the Street -0.1%) although the Dec numbers (GDP, industrial production, and manufacturing production) came in above plan. RTRS \u00a0
\n\tThe looming Israeli military plans to invade Rafah have exacerbated tensions between Israeli Prime Minister Benjamin Netanyahu\u2019s government and the Biden administration, which has grown increasingly frustrated with its attempts to rein in Israel\u2019s military campaign. WSJ
\n\tIsrael on Wednesday launched its longest and heaviest attack on neighboring Lebanon since the start of the Gaza war, striking several locations in the south, killing at least three Hezbollah fighter and seven civilians, and raising further the specter of war between the two long-standing enemies. WaPo
\n\tDeere (-4% premkt) downgraded its annual profit outlook as falling crop prices lower demand for equipment. Cisco also fell 4% premarket after slashing its full-year forecast and announcing plans to cut about 5% of its workforce. BBG
\n\tCrude will potentially be in surplus this year as demand growth loses steam and supplies from outside OPEC+ continue to swell, the IEA said. The agency stuck to its 2024 demand growth forecast of 1.2 million barrels a day while forecasting non-OPEC+ supplies to rise by 1.6 million b\/d, led by the US and Brazil. BBG<\/p>\n

A more detailed look at global markets courtesy of Newsquawk<\/em><\/p>\n

APAC stocks mostly took impetus from the rebound on Wall St after the Fed downplayed the recent CPI report.\u00a0 <\/strong>ASX 200 was led higher by a rally in tech and real estate but with upside capped by disappointing jobs data. Nikkei 225 climbed back above the 38,000 level and printed a fresh 34-year high with the index largely unfazed by the surprise contraction in Q4 GDP which showed that Japan’s economy entered into a technical recession. Hang Seng traded rangebound amid quiet newsflow and the continued absence of mainland participants<\/p>\n

Top Asian News<\/em><\/p>\n

Japan’s Cabinet Office said 2023 nominal GDP undershoots Germany’s to become the world’s fourth largest economy in dollar-denominated terms\u00a0and that weak domestic demand for clothing and eating out caused a decline in private consumption.
\n\tJapan’s Economy Minister Shindo said consumer spending lacks strength and capex is taking time to realise, while he added the government aims to achieve wage increases that surpass inflation, leading to consumption growth.\u00a0The government also aims to boost the potential growth rate by promoting domestic investment and aims to realise a virtuous cycle of wage increase and economic growth.
\n\tMonetary Authority of Singapore official said monetary policy is appropriate and the next policy statement is scheduled for April.\u00a0MAS also noted there are continuing uncertainties on growth and inflation which it is monitoring the implications of quite closely.
\n\tRBA Governor Bullock said the global economy held up better than initially expected and had been worried about hard landings and recessions,\u00a0while she added\u00a0they are in a good position to get inflation down in a reasonable amount of time.
\n\tJapanese Chief Cabinet Secretary, when asked about GDP, says they will mobilise all available policies to achieve higher growth and wage increases that exceed inflation<\/p>\n

European bourses, Stoxx600 (+0.5%) began the session entirely in the green and continued to extend throughout the European morning. <\/strong>The CAC 40 (+0.9%) incrementally outperforms after a slew of strong results from heavyweight names within the index. European sectors hold a positive tilt with Autos parked at the top of the pile, assisted by gains in Renault (+5.5%), with Industrials also benefitting from post-earning strength in Safran (+3.6%) and Schneider Electric (+3.2%). US Equity Futures (ES +0.1%, NQ +0.1%, RTY +0.9%) are modestly firmer, though with clear outperformance in the RTY, as it continues the prior day’s outperformance. Cisco (-5.5%) reported generally strong metrics, though did provide soft guidance. Goldman Sachs on European Stocks: raises 12-month Stoxx 600 target to 510 (prev. 500; last close 485). upgrade Travel & Leisure to Overweight from Neutral; upgrade Consumer Products & Services to Overweight from Neutral; downgrade Energy to Neutral from Overweight; downgrade Utilities to Underweight from Neutral.<\/p>\n

Top European News<\/em><\/p>\n

Goldman Sachs\u00a0cuts the UK’s 2024 GDP growth forecast to 0.4% (prev. 0.6%)
\n\tECB President Lagarde\u00a0says “the latest data confirm the ongoing disinflation process and is expected to bring us gradually further down over 2024 as the impact of past upward shocks fades and tight financing conditions help to push down inflation”. New framework will most likely compromise bond portfolio and lending operations; we will be done with framework review in a couple months. “Last thing I want is hasty decision and then inflation rises again”.
\n\tECB’s de Cos\u00a0says bank’s projections foresee inflation to continue falling; still need some time on the exact timing of rate cut
\n\tGermany’s DIHK: German Co’s expect economy to shrink in 2024 and GDP to contract by 0.5%; 35% of surveyed Co’s expect business to worsen in next 12m, 14% expect improvements. Bad sentiment in German economy is rising. Expects inflation of 2.7% exports to grow by 0.5%, private consumption spending to grow by 0.5% in 2024. 57% of Co’s see economic policy framework in Germany as business risk. 33% of German Co’s plan to decrease investments in Germany, 24% plan investment expansions.
\n\tMaersk (MAERSB DC)\u00a0says as security risks remain highly elevated, vessels previously bound to transit area continue to be diverted south via Cape of Good Hope.<\/p>\n

Earnings<\/strong><\/p>\n

Cisco Systems Inc (CSCO)<\/strong>\u00a0– Q2 2024 (USD): Adj. EPS 0.87 (exp. 0.84), Revenue 12.8bln (exp. 12.71bln); to cut about 5% of global workforce.\u00a0KEY METRICS<\/strong>: Networking revenue 7.08bln (exp. 7.16bln). Security revenue 973mln (exp. 956.8mln). Collaboration revenue 989mln (exp. 966mln). Adj. gross margin 66.7% (exp. 65.7%). Adj. operating margin 33% (exp. 32.1%).\u00a0FY24 GUIDANCE<\/strong>: Revenue 51.5-52.5bln (prev. 53.8-55.0bln, exp. 54.33bln). Adj. EPS 3.68-3.74 (prev. 3.87-3.93, exp. 3.87).\u00a0Q3 GUIDANCE<\/strong>: Revenue 12.1-12.3bln (exp. 13.1bln). Adj. EPS 0.84-0.86 (exp. 0.92). Adj. gross margin 66-67% (exp. 65.8%). Adj. operating margin 33.5-34.5% (exp. 33.8%).\u00a0Shares -5.5% in pre-market trade
\n\tAirbus (AIR FP)<\/strong>\u00a0– Q4 (EUR): Adj. EBIT 2.21bln (exp. 2.26bln). Revenue 22.9bln (exp. 22.5bln), sees 2024 deliveries about 800 planes (exp. 826). Co. is to propose a special dividend of EUR 1\/shr. Sees 2024 adj. EBIT between 6.5-7bln (exp. 7.15bln). On widebody aircraft, the Co. continues towards a monthly rate of 4 aircraft for the A330 in 2024 and rate 10 in 2026 for the A350. Co. assumes no additional disruptions to the world economy, air traffic, the supply chain, the Company\u2019s internal operations, and its ability to deliver products and services. (Airbus)\u00a0Index Weightings<\/strong>: CAC 40 (4.8%), Euro Stoxx 50 (2.6%), Stoxx 600 (0.8%).\u00a0Shares -1% in European trade
\n\tPernod Ricard (RI FP)<\/strong>\u00a0– H1 (EUR): Sales 6.59bln (exp. 6.58bln), Net 1.57bln (exp. 1.43bln), Operating Profit 2.14bln (prev. 2.42bln), FCF 301mln. FY24 Outlook: Broadly stable net sales in H2 vs H1. EUR 300mln buyback for the year, EUR 150mln completed in H1. (Newswires)\u00a0Shares +3.8% in European trade
\n\tRenault (RNO FP)<\/strong>\u00a0– FY23 (EUR): Net 2.32bln (exp. 3.52bln), Revenue 52.38bln (exp. 52.88bln). Proposes 1.85 dividend (exp. 1.37). FY24 Operating Margin view of “at least” 7.5%, FY24 FCF view “at least” 2.5bln. (Newswires)\u00a0Shares +7.5% in European trade
\n\tSchneider Electric (SU FP)<\/strong>\u00a0– FY23 (EUR): adj. EBITA 6.41 (exp. 6.03bln, prev. 6.02bln Y\/Y), Revenue 34.2bln (exp. 36.04bln, prev. 35.9bln Y\/Y). Guides initial FY24 adj. EBITA organic +8-12%, organic sales +6-8%, Adj. EBITA margin +40-60%. CFO does not expect to implement big increases this year. (Newswires)
\n\tSafran (SAF FP)<\/strong>\u00a0– FY23 (EUR): Adj. Revenue 23.2bln (exp. 23.3bln), Op. 3.17bln (prev. 2.41bln Y\/Y), Op margin 13.6% (exp. 13.8%). Guides initial FY24 adj. recurring op. close to 4bln, adj. revenue 27.4bln (exp. 26.69bln), FCF 3bln. Expects M&A activity to accelerate. (Newswires)\u00a0Shares +2.5% in European trade
\n\tStellantis (STLAM IM\/STLAP FP)<\/strong>\u00a0– H2 (EUR): Net Revenue 91.176bln (exp. 91.1bln). Adj. Operating Income 10.217bln (exp. 9.54bln; -10% Y\/Y). Adj. Operating Margin 11.2% (prev. 14.4% in H1). Co. plans a EUR 3bln open market share buyback program this year.\u00a0OTHER METRICS<\/strong>: Dividend proposed of EUR 1.55 per common share, increase of approximately 16% compared to prior year, pending shareholder approval. Industrial free cash flows of EUR 12.9bln; +19% Y\/Y. LEV sales up 27% in 2023, with PHEVs at 1 in U.S. and #2 for LEVs in US 21% increase in global BEV sales in 2023.\u00a0OUTLOOK<\/strong>\u00a0The Company is reiterating a minimum commitment of double-digit adjusted operating income (AOI) margin in 2024.\u00a0Shares +4.5% in European trade<\/p>\n

FX<\/strong><\/p>\n

USD<\/strong>\u00a0is steady ahead of a deluge of US data. For now, a test of 105.00 in the index is yet to materialise after yesterday’s 104.97 peak. If 105.00 goes, there is clean air until 105.73 which was the November 14th peak.
\n\tEUR<\/strong>\u00a0has picked up from yesterday’s 1.0695 YTD trough in light of EZ-specific newsflow, and unreactive to ECB Lagarde. Upside sees the 10DMA at 1.0755 and 100DMA at 1.0794 ahead of the 1.08 mark.
\n\tGBP<\/strong>\u00a0is softer vs. the\u00a0USD<\/strong>\u00a0as GDP data sees the UK enter into a technical recession. Cable printed a low of 1.2543 but stopped short of yesterday’s 1.2536 trough.
\n\tJPY<\/strong>\u00a0is firmer vs. the\u00a0USD<\/strong>\u00a0despite soft Japanese GDP metrics. Pullback could be a combination of technical factors after the pair ran out of steam at 150.88 as well as increased jawboning from Japanese officials.
\n\tAUD<\/strong>\u00a0a touch firmer vs. the\u00a0USD<\/strong>\u00a0despite disappointing jobs data overnight.\u00a0AUD\/USD<\/strong>\u00a0has made a high of 0.6501 but is yet to materially clear the level or test the pre-US CPI peak of 0.6537.<\/p>\n

Fixed Income<\/strong><\/p>\n

Gilts<\/strong>\u00a0are firmer after the regions GDP print sparked a dovish gap-up of 49 ticks to a 98.29 open before extending to a 98.59 peak. Overall, the data was dovish but is unlikely to have any significant impact on the BoE’s calculus for the first cut.
\n\tUSTs<\/strong>\u00a0are in-fitting with price action seen in\u00a0Gilts<\/strong>\/Bunds<\/strong>; specifics light into a busy afternoon agenda; usual weekly data and Fed’s Waller the highlights. As it stands,\u00a0USTs<\/strong>\u00a0at the top-end of 110-00+ to 110-10 bounds while the yield curve is slightly flatter.
\n\tBunds<\/strong>\u00a0are firmer in tandem with Gilts. Currently up to 134.18 at best, but have since retreated back beneath 134.00 as newsflow slows with Chief Economist Lane the afternoon highlight.
\n\tSpain<\/strong>\u00a0sells EUR 5.896bln vs exp. EUR 5-6bln 2.50% 2027, 3.50% 2029 and 2.35% 2033 Bono
\n\tFrance<\/strong>\u00a0sells EUR 11.992bln vs exp. EUR 10.5-12bln 2.50% 2027, 2.75% 2029 and 0.00% 2031 OAT<\/p>\n

Commodities<\/strong><\/p>\n

Crude<\/strong>\u00a0is subdued following the large inventory builds in the prior session. Markets are seemingly putting more weight on the demand implications of recession as opposed to the supply concerns from expanding geopolitics. Currently, Brent holds just above USD 81.00\/bbl.
\n\tUpward biases across\u00a0precious metals<\/strong>\u00a0following the recent pullback in the Dollar, yields and amidst the heightened geopolitical landscape;\u00a0XAU<\/strong>\u00a0found intraday support close to its 100 DMA (1,990.35\/oz).
\n\tBase metals<\/strong>\u00a0are mostly firmer albeit with mild gains amid the slight pullback in the\u00a0Dollar<\/strong>\u00a0after Fed officials downplayed the recent hot US CPI report.
\n\tIEA OMR<\/strong>: 2024 global oil demand growth downgraded by 200k BPD to 1.22mln BPD (prev. 1.24mln); says global oil demand growth is losing momentum, with pace of expansion set to decelerate from 2.3mln BPD last year, in part due to China. With the robust outlook for non-OPEC+ supply, our balances suggest a slight build in inventories in 1Q24 despite the extension and deepening of OPEC+ supply curbs. From 2Q24 onwards, continuation of this strength could leave OPEC+ pumping above requirements for its crude oil if extra voluntary cuts are unwound in the second quarter.
\n\tIran<\/strong>\u00a0sets the March Iranian light crude OSP to Asia at Oman\/Dubai + USD 1.75\/bbl<\/p>\n

Geopolitics: Middle East <\/strong><\/p>\n

Australia, New Zealand and Canada issued a joint statement that they are gravely concerned by indications Israel is planning a ground offensive into Rafah which would be catastrophic,\u00a0while it was added that an immediate humanitarian ceasefire is urgently needed.<\/p>\n

Geopolitics: Other<\/strong><\/p>\n

US informed Congress and European allies of new intelligence regarding Russian nuclear capabilities although they do not pose an urgent threat to the US and are related to attempts by Russia to develop a space-based weapon,\u00a0according to sources cited by Reuters.
\n\tUS Treasury Secretary Yellen said Russian President Putin will continue to threaten other countries if the US is not supportive of Ukraine, while she urged US House members to approve the supplemental funding bill with aid for Ukraine\u00a0and said US national security is at stake. Furthermore, she said Trump’s remarks on NATO and Russia were highly irresponsible and could undermine national security.
\n\tJapanese Chief Cabinet Secretary Hayashi said North Korea is strengthening surprise attack capabilities by launching missiles from various platforms such as from submarines to trucks,\u00a0according to Reuters.<\/p>\n

US Event Calendar<\/strong><\/p>\n

\u00a0<\/p>\n

08:30: Jan. Import Price Index YoY, est. -1.3%, prior -1.6%
\n\tJan. Import Price Index MoM, est. 0%, prior 0%<\/p>\n

\t08:30: Jan. Export Price Index YoY, prior -3.2%
\n\tJan. Export Price Index MoM, est. -0.1%, prior -0.9%<\/p>\n

\t08:30: Feb. Initial Jobless Claims, est. 220,000, prior 218,000
\n\tFeb. Continuing Claims, est. 1.88m, prior 1.87m<\/p>\n

\t08:30: Jan. Retail Sales Advance MoM, est. -0.2%, prior 0.6%
\n\tJan. Retail Sales Ex Auto MoM, est. 0.2%, prior 0.4%
\n\t\tJan. Retail Sales Control Group, est. 0.2%, prior 0.8%<\/p>\n

\t08:30: Feb. Philadelphia Fed Business Outl, est. -8.1, prior -10.6
\n\t08:30: Feb. Empire Manufacturing, est. -12.5, prior -43.7
\n\t09:15: Jan. Industrial Production MoM, est. 0.2%, prior 0.1%
\n\tJan. Manufacturing (SIC) Production, est. 0%, prior 0.1%
\n\t\tJan. Capacity Utilization, est. 78.8%, prior 78.6%<\/p>\n

\t10:00: Dec. Business Inventories, est. 0.4%, prior -0.1%
\n\t10:00: Feb. NAHB Housing Market Index, est. 46, prior 44
\n\t16:00: Dec. Total Net TIC Flows, prior $260.2b<\/p>\n

Central Bank speakers<\/strong><\/p>\n

13:15: Fed\u2019s Waller Gives Remarks on Dollar\u2019s International Role
\n\t19:00: Fed\u2019s Bostic Speaks on Outlook, Policy<\/p>\n

DB’s Jim Reid concludes the overnight wrap<\/strong><\/p>\n

The last 24 hours have been surprisingly calm after the turmoil of the previous session. 2yr US yields rallied back -8.0bps after rising +18.3bps the day before, encouraged by some dovish Fed speak. 10yr yields fell -5.8bps after the +13.5bps spike the previous session while December 2024 Fed pricing increased +8.9bps after a full 25bps had been taken out on Tuesday. The S&P 500 closed +0.96% higher, retracing nearly three-quarters of Tuesday\u2019s losses.<\/p>\n

Today we have a busy day of US data with retail sales the highli ght. So we will see if that continues to encourage volatility ahead of an important US PPI tomorrow, as some of its subcomponents inform forecasts for the core PCE number later this month. As Chicago Fed President Goolsbee reminded markets yesterday, the Fed\u2019s inflation goal is based on the core PCE number, and not CPI. In addition, some of the strong services CPI drivers we saw in Tuesday\u2019s print do not enter the PCE calculation and are instead taken from the PPI. A known dove, Goolsbee also stated \u201cinflation can be [a] bit higher and still on track to 2%\u201d and that he does not \u201csupport waiting until inflation at 2%\u201d before the Fed cuts.<\/p>\n

Whether he represents the views of the rest of the committee is open to some debate given his dovish history but for yesterday it was enough to calm the market to some degree as an additional +8.9bps of cuts were priced in by the Fed\u2019s December meeting and we saw a notable -8.0bps and -5.8bps rally in 2 and 10yr yields. But there was little change in the market\u2019s expectation of the timing of the first cut, with the first full 25bps still priced in for the June meeting.<\/p>\n

Over in Europe, markets also modestly raised their expectations of ECB rate cuts, with +5.8bps more of cuts priced in by year-end. 10yr bund yields fell -5.7bp s, while OATs (-6.5bps) and BTPs (-9.0bps) outperformed.<\/p>\n

In US equities, the S&P 500 rose by +0.96%, reversing much of Tuesday\u2019s -1.37% decline and closing back above the 5,000 mark. The Russell 2000 (+2.44%) was the outperformer after the rout the day before that saw it experience its worst day (-3.96%) since June 2022, when the Fed made a late surprising move to guide the market to a 75bps hike. The NASDAQ rose +1.30%, with the Magnificent 7 (+1.53%) effectively erasing their -1.54% decline the previous day. A notable milestone was Nvidia (+2.46%) overtaking Alphabet\u2019s (+0.55%) market capitalisation, to become the third largest company at $1.825trn. This comes only one day after the semiconductor company topped Amazon (+1.39% yesterday). Nvidia\u2019s rise spearheaded a rally for the wider semiconductor sector, as the Philadelphia Semiconductor Index gained +2.18%. My CoTD yesterday discussed what happened next to all the top 5 companies in the S&P 500 over the last 60 years. See it here for more.<\/p>\n

In the Eurozone, in terms of data we had the second print of Q4 GDP. As is typical, this was confirmed at the stagnant (0.0%) flash reading, but the details pointed to still solid (+0.3% qoq) employment growth in Q4. We also had the December industrial output, which posted at +2.6% month-on-month (vs -0.2% expected), but this upside was mostly due to distorted Ireland data. Against this backdrop, the STOXX 600 climbed +0.50%.<\/p>\n

After the strong beat in US inflation on Tuesday, the downside surprise in UK CPI for January was a support for market from the early stages in Europe. UK CPI rose 4.0% year-on-year (vs 4.1% expected), and core by 5.1% (vs 5.2% expected).Services inflation rose 6.5%, lower than both consensus estimates (6.8%) and the BoE\u2019s expectations (6.6%). But this is still a tenth higher than December\u2019s print, and BoE\u2019s Bailey confirmed yesterday this result is \u201cnot compatible with 2% target\u201d. Yields on 10yr gilts still fell -10.5bps and the FTSE 100 rose +0.75%. Shortly after you read this, we will have the results of the Q4 GDP report for the UK. Our UK economist expects the UK slipped into a marginal technical recession in the second half of last year. Read the preview here.<\/p>\n

Overnight in Asia, we had the preliminary Japanese Q4 GDP results, which came in below expectations at -0.4% quarter-on-quarter (vs 1.1% expected), up from -2.9% in Q3. See our economist’s thoughts on the number here. There is now a high likelihood Japan is in a technical recession, and markets pared back expectations of rate hike bets, with the expected probability of a 10bps hike by April falling from 73% to 69%. Japanese equities were little fazed, with the Nikkei 225 up +0.96% as I type with a weaker Yen and tech driving the gains.<\/p>\n

The Hang Seng index is also enjoying the risk-on sentiment, rising +0.43%. The Taiwanese TAIEX is up +2.78% as I type, having briefly touched an intraday record high, supported by an increase in the share price of semiconductor juggernaut Taiwan Semiconductor Manufacturing Co (+8.00%). Elsewhere, the Korean Kospi is trading down -0.15%. US equities futures are flat, whilst 10yr Treasury yields are down a further -2.0bps in the Tokyo session.<\/p>\n

Briefly on commodities, US crude oil inventories rose by 12.02mn barrels, the greatest increase since December, and the second consecutive week of gains. This sent Brent crude tumbling -1.41% to $81.60\/bbl yesterday after previously trading up on the day. WTI crude fell -1.58% to $76.64\/bbl. Both are down an additional third of a percent this morning.<\/p>\n

Finally to the day ahead, in terms of US data we have January retail sales, industrial production, capacity utilization, February Philadelphia Fed business outlook, NAHB housing market index, Empire manufacturing index, December net TIC flows, business inventories and weekly jobless claims. Elsewhere, we get UK Q4 GDP, Eurozone December trade balance, Canada January housing sales and December manufacturing sales. We will be hearing from the ECB\u2019s Lane and Nagel, and the BoE\u2019s Greene and Mann. Finally, earning releases include Applied Materials, Deere, Stellantis, DoorDash, DraftKings, and Roku.<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nThu, 02\/15\/2024 – 08:15<\/span><\/p>\n

\u200bRead More<\/a>\u00a0<\/p>\n

\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

Futures Rise Ahead Of Flood Of Economic Data Tuesday’s post-hot CPI dump now seems like a distant bad dream as US equity futures continued their…<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1457490","post","type-post","status-publish","format-standard","hentry","category-news","wpcat-1-id"],"_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1457490","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1457490"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1457490\/revisions"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1457490"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1457490"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1457490"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}