US stocks gained in softer yield environment following a data deluge - Newsquawk Asia-Pac Market Open

• US stocks saw broad-based gains with the advances led by small-caps amid the lower yield environment as participants digested a slew of data releases in which particularly weak retail sales were the highlight and industrial production also disappointed, while the Philly and Empire Fed surveys topped forecasts and initial jobless claims declined.
• USD weakened amid a slew of data releases including weaker-than-expected retail sales and industrial production which dragged the DXY closer towards its 100DMA of 104.10 before bouncing off lows.
• Looking ahead, highlights include South Korean Unemployment Rate & Money Supply, Singapore Non-Oil Exports, Malaysian GDP, Supply from Japan, Holiday Closure in Mainland China.

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LOOKING AHEAD

• Highlights include South Korean Unemployment Rate & Money Supply, Singapore Non-Oil Exports, Malaysian GDP, Supply from Japan, Holiday Closure in Mainland China.
• Click here for the Newsquawk Week Ahead.

US TRADE

• US stocks saw broad-based gains with the advances led by small-caps amid the lower yield environment as participants digested a slew of data releases in which particularly weak retail sales were the highlight and industrial production also disappointed, while the Philly and Empire Fed surveys topped forecasts and initial jobless claims declined.
• SPX +0.58% at 5,029, NDX +0.21% at 17,845, DJIA +0.91% at 38,773, RUT +2.45% at 2,061.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Waller (voter) said USD is likely to remain the world's reserve currency and recent events if anything, strengthen that status, while he added that several factors weigh against the Yuan as an attractive asset.
• White House Economic Adviser Brainard said efforts to boost spending on infrastructure and computer chips alongside a return of people to the workforce, have helped to bring inflation down without a big decline in economic activity. Brainard also said there is some mixed economic data, but underlying fundamentals are good with consumer purchasing power strong and productivity growth data is encouraging but cautioned about it.

DATA RECAP

• US NY Fed Manufacturing (Feb) -2.4 vs. Exp. -15.0 (Prev. -43.7)
• US Philly Fed Business Index (Feb) 5.2 vs. Exp. -8.0 (Prev. -10.6)
• US Retail Sales MM (Jan) -0.8% vs. Exp. -0.1% (Prev. 0.6%, Rev. 0.4%)
• US Retail Sales Ex-Autos MM (Jan) -0.6% vs. Exp. 0.2% (Prev. 0.4%)
• US Retail Control (Jan) -0.4% vs. Exp. 0.3% (Prev. 0.8%, Rev. 0.6%)
• US Industrial Production MM (Jan) -0.1% vs. Exp. 0.3% (Prev. 0.1%)
• US Capacity Utilization (Jan) 78.5% vs. Exp. 78.8% (Prev. 78.6%, Rev. 78.7%)
• US Business Inventories MM (Dec) 0.4% vs. Exp. 0.4% (Prev. -0.1%)
• US Export Prices MM (Jan) 0.8% vs. Exp. -0.1% (Prev. -0.9%, Rev
• US Import Prices MM (Jan) 0.8% (Rev. -0.7%)
• US NAHB Housing Market Index (Feb) 48.0 vs. Exp. 46.0 (Prev. 44.0)
• US Initial Jobless Claims 212k vs. Exp. 220k (Prev. 218.0k, Rev. 220k)
• US Continued Jobless Claims 1.895M vs. Exp. 1.880M (Prev. 1.871M, Rev. 1.865M)

FX

• USD weakened amid a slew of data releases including weaker-than-expected retail sales and industrial production which dragged the DXY closer towards its 100DMA of 104.10 before bouncing off lows. Conversely, other releases were more encouraging including the NY and Philly Fed surveys, while Initial Jobless Claims were lower-than-forecast but Continued Claims rose.
• EUR benefitted from the weaker dollar and in the backdrop of several ECB comments.
• GBP was firmer after reversing the earlier losses spurred by GDP data which showed the UK economy entered into a recession in late 2023.
• JPY strengthened with USD/JPY slipping beneath the 150.00 level after the slew of US data.
• Norges Bank Governor Bache said they won't need more rate hikes if the economy develops as expected and they must uphold confidence in the inflation target, while she added that inflation is coming down and that Norwegian rates cannot deviate substantially from foreign rates over time.

FIXED INCOME

• Treasuries bull-flattened but closed off highs amid a deluge of mixed data releases including disappointing retail sales and industrial production, ahead of US PPI figures and a 20yr auction.

COMMODITIES

• Oil prices gained as a softer dollar and Middle East concerns provided tailwinds.
• IEA OMR downgraded the 2024 global oil demand growth forecast by 200k BPD to 1.22mln BPD (prev. 1.24mln) and stated that global oil demand growth is losing momentum with the pace of expansion set to decelerate from 2.3mln BPD last year partly due to China.
• US DoE announced contracts awarded for 2.95mln bbls of US-produced crude oil for the SPR.

GEOPOLITICAL

• Hamas rejected an Israeli offer for a 3-month ceasefire and the exit of its leaders from Gaza, while it insisted on releasing all Palestinian prisoners and keeping the movement in Gaza, according to Al Arabiya sources.
• Israeli military said it killed a senior commander of Hezbollah's Radwan force and a deputy during strikes on Lebanon on Wednesday.
• Hezbollah said it fired "dozens of rockets" at Israel's Kiryat Shmona in a "preliminary response" to the killing of 10 civilians in south Lebanon.
• US State Department said the US is working with Qatar, Israel and Egypt on the hostage talks to find an agreement and there are some very hard issues to be resolved, while it was also reported that US Secretary of State Blinken said he believes an Israel-Hamas hostage deal is possible.
• US conducted a cyberattack on a suspected Iranian spy ship, according to NBC.
• Venezuelan Foreign Minister Gil requested local UN staff to leave the nation in 72 hours and will suspend local high commission UN activities.

ASIA-PAC

NOTABLE HEADLINES

• Chinese President Xi reportedly wants to revive socialist ideas about housing and put the state back in charge, according to WSJ. The report noted that under a new strategy, the CCP would take a larger share of the market with two major programs underpinning the sector, while Beijing remains reluctant to offer direct liquidity support to developers because officials are worried about reinflating the housing bubble.
• US Senator Rubio urged the SEC to block Shein’s IPO unless the retailer discloses risks of operating in China, according to Reuters citing a letter.
• RBNZ Governor Orr refrained from talking about the rate outlook and said they have got more work to do to get inflation expectations anchored to 2%. Governor Orr said a flexible approach to inflation targeting with a medium-term focus remains appropriate and bringing levels of core inflation back in line with the bank's 1-3% target is an important part of bringing inflation back to the 2% midpoint, while he also noted the removal of the maximum sustainable employment objective does not mean any big changes to RBNZ's monetary policy strategy.

EU/UK

NOTABLE HEADLINES

• BoE's Greene said would need to see further evidence that inflation persistence is less embedded than previously feared before she would consider voting to loosen policy and thinks policy will need to remain restrictive for some time in order for inflation to sustainably return to the target. Furthermore, Greene only expects inflation to come down to 2% briefly and said they cannot declare victory just because inflation hits 2% if it rises again, while she would not put much weight on the UK entering a technical recession and noted the surprise on the data was minor which should not shift her view much.
• BoE's Mann said the GDP data is a rear-view mirror and confirms her view that H2 of 2023 would be a soft patch, while she added the UK unemployment rate is petty low and the market remains tight. Mann added they will get another inflation print before the next rate decision and wage growth is slowing but the pace remains challenging for CPI.
• UK Chancellor Hunt was told by the OBR that there is less money available than expected for his Budget on March 6th, according to the Telegraph. The report added that the Treasury is looking to adopt deeper spending cuts than planned for the years after the general election to fund the tax cuts which Number 10 wants, while a sizeable, eye-catching tax cut is still being targeted with income tax or National Insurance tax seen as the leading options in Downing Street.
• ECB President Lagarde said the latest data confirms the ongoing disinflation process and is expected to bring them gradually down over 2024 as the impact of past upward shocks fades and tight financing conditions help to push down inflation. Lagarde also commented that the new framework will most likely compromise of bond portfolio and lending operations, while they will be done with the framework review in a couple of months. Furthermore, Lagarde said the last thing she wants is a hasty decision and then inflation rises again.
• ECB's de Cos said the bank's projections foresee inflation to continue falling and still need some time on the exact timing of a rate cut.
• ECB's Scicluna said he is open to a rate cut in March as inflation fades and urged caution on dismissing the market's views, while he added the "choker" on the economy should be loosened and that risks are everywhere, but inflation is easing.
• European Commission winter forecasts cut EZ GDP growth forecast for 2024 to 0.8% (prev. 1.2% in November) and sees 1.5% growth in 2025, while it sees EZ inflation slowing down to 2.7% in 2024 (prev. 5.4% in 2023) and decelerating to 2.2% in 2025.

DATA RECAP

• UK GDP QQ (Q4 P) -0.3% vs. Exp. -0.1% (Prev. -0.1%)
• UK GDP YY (Q4 P) -0.2% vs. Exp. 0.1% (Prev. 0.3%, Rev. 0.2%)
• UK GDP Est. MM (Dec) -0.1% vs. Exp. -0.2% (Prev. 0.3%, Rev. 0.2%)
• UK GDP Est. YY (Dec) 0.0% vs. Exp. 0.3% (Prev. 0.2%, Rev. -0.3%)
• UK GDP Est. 3M/3M (Dec) -0.3% vs. Exp. -0.1% (Prev. -0.2%)
• UK Industrial Output MM (Dec) 0.6% vs. Exp. -0.1% (Prev. 0.3%, Rev. 0.5%)
• UK Industrial Output YY (Dec) 0.6% vs. Exp. -0.4% (Prev. -0.1%, Rev. 0.1%)
• UK Manufacturing Output MM (Dec) 0.8% vs. Exp. 0.0% (Prev. 0.4%, Rev. 0.8%)
• UK Manufacturing Output YY (Dec) 2.3% vs. Exp. 0.6% (Prev. 1.3%, Rev. 1.9%)