The March towards the FED!
FOMC day- certainly skewed toward a less dovish outcome: the longer it takes to get to Fed's inflation target, the longer it takes for the Fed to cut, the interest payments will obviously be higher which in turn would continue to expand the deficit & resultant fiscal impulse as well as inflation.
Housing starts jumped 10.7% during Feb-(Shelter inflation accounts for around 30% of CPI and was widely anticipated to slow - however the entry of 3.3 million migrants in 2023 is creating demand for housing)
US 20yr auction was very strong. It came over 2bp through the when-issued market yield, indicative of strong pricing at auction.
Oil: Risks of supply disruption in Russian refined products to provide another support when the market is set to tighten following rollover of additional cuts from OPEC+ into 2Q24.
Germany’s ZEW survey mixed, with a more positive current conditions but a decline in expectations index. European Commission will release flash Consumer Confidence gauge. Lagarde speaks today - dead cat bounce off 1.0830 mainly on EURJPY - a close below 1.0830 targets the 61.8 of that moves at 1.0803.
One-year LPR kept at 3.45%. Five-year LPR kept at 3.95%. However, PBOC-affiliated news media believes there is room for decline in financing costs.
UK CPI: tiebreaker for GBP/USD -Should UK core & headline CPI drop, BoE could pull forward rate cuts, (ahead of elections) putting 200-DMA at 1.2594 & 2024 lows by 1.2518 in focus.
Long-running divide between domestically focused businesses- who are not happy with higher rates & weaker currency & export-rich multinationals continue.
Note BoJ to continue buying ¥6 trillion of JGBs per month. So, in a way, this new approach simply gives markets less clarity - arbitrary maturities to manipulate yields as BoJ sees fit - Currency taken to cleaners - Japan holiday today - no intervention for sure - Test of 151.94, Oct 2022 high imminent.
Interestingly, Jan purchase and sale numbers sharply lower - the "ghost" of cash dollar shortage comes back to haunt - no obvious explanation.