Financial Markets Morning Commentary
Financial Markets Morning Commentary
Tom Pawlicki
- Interest Rates
Financial Markets Morning Commentary
By: Tom Pawlicki, Senior Specialist, Market Intelligence
Economic
- 10-year futures are +37/32. Yields are -1.55 bps at 4.059%. S&P futures are -23.00. Bitcoin is -0.8%. GDP came in weaker-than-expected while PCE prices were higher than expected. The 10-year yield did not move on the data while stocks fell slightly. CNBC reported that the government shutdown removed around 1.15% from GDP, while the PCE price index may have been elevated because it doesn’t have as high of a weighting on housing as the CPI number does. Housing prices have been steadily falling in CPI. The end result is that the numbers were not quite as much of a shock as their miss compared to estimates may have indicated. Regardless, the odds of rate cuts fell marginally. Still to come today are new home sales and Michigan final sentiment. The Supreme Court has an opinion day today, and a verdict on tariffs could be announced. Oil prices are slightly lower, although the US-Iran issue continued to ramp up from yesterday. The 10-15 day deadline from President Trump is in focus, and precious metals are higher on safe-haven.
- (Reuters) US Q4 advance GDP was +1.4% vs. +3.0% expected and +4.4% previously. The GDP deflator was +3.7% vs. +2.9% expected and +3.7% previously. CNBC reported that the government shutdown reduced federal expenditures by around 1.15% of the GDP figure, so the market may have viewed the number with that amount being added back onto the advance GDP reading.
- (Reuters) US PCE price index was +0.4% m/m in December vs. +0.3% expected and +0.2% previously. The y/y rate was +2.9% vs. +2.8% expected and +2.8% previously. Core PCE prices were +3.0% y/y vs. +2.9% expected and +2.8% previously.
- (Reuters) San Francisco Federal Reserve President Mary Daly on Thursday said that with the labor market in a better place because of the Fed's rate cuts last year, and with inflation expected to resume its decline as the impact of tariffs rolls off, monetary policy is where it should be.
- (WSJ) The White House is ratcheting up pressure on Congress to enact President Trump’s proposed ban on investors buying homes, laying out for the first time what sort of investment firms he plans to target.
- (Reuters) Japanese nationwide Core CPI was +2.0% y/y in January vs. +2.0% expected and +2.4% previously.
- (Reuters) Eurozone flash HCOB composite PMI was 53.1 in February vs. 52.3 expected and 52.1 previously.
- (Bloomberg) Eurozone fourth-quarter negotiated wages rose 3% from a year ago, the ECB said Friday. That’s higher than the previous period’s 1.9% reading, but way below the 5.4% peak in 2024.
Geopolitical
- (Reuters) US President Donald Trump’s warning to Iran — that it has just 10 to 15 days to avert potential military action — suggests matters could come to a head when the United Nations watchdog next meets to decide whether to further censure the Islamic Republic over its nuclear program. The International Atomic Energy Agency’s board is scheduled to convene in 10 days, on March 2, for five days of meetings in Vienna. Diplomats are expected to weigh a new resolution of censure, that could refer Iran to the UN Security Council for further action.
- (WSJ) President Trump is weighing an initial limited military strike on Iran to force it to meet his demands for a nuclear deal, a first step that would be designed to pressure Tehran into an agreement but fall short of a full-scale attack that could inspire a major retaliation.
- (Reuters) Russian drones hit Ukraine's oil and gas infrastructure in the central Poltava region, causing damage and a fire, the state energy company Naftogaz said on Friday.
- (Reuters) Ukrainian drones attacked the port of Sevastopol in Russian-annexed Crimea, killing one person, the regional governor said early on Friday.
Energy
- WTI is -$0.18/bbl at $66.22/bbl, while Brent is -$0.36/bbl at $71.30/bbl. Natural gas is +$0.002/MMBtu at $2.998/MMBtu.
- (Reuters) Venezuela's refining network is operating at about 35% of its installed capacity of 1.29 million barrels per day, workers at the facilities said on Thursday, above the 20% to 25% of last year but still a low volume to secure enough fuel to meet rising domestic demand. The Amuay, Cardon, El Palito and Puerto la Cruz refineries were jointly processing some 450,000 bpd of Venezuelan crude this week, according to the sources, who added that PDVSA is trying to keep key gasoline-making plants in service.
- (Bloomberg) India temporarily extended permission for four Russian insurers to cover tankers calling at its ports, as the government seeks to sustain crude imports while also managing US pressure to end shipments from Moscow.
- (Bloomberg) LyondellBasell Industries NV slashed its fourth-quarter dividend by almost half as the chemical maker cited challenging market conditions. The board announced a quarterly dividend of 69 cents a share, down from a $1.37 payout a year earlier, the company said in a statement Friday. The stopgap move lasts for one month, enabling Soglasie Insurance Company Ltd., Ugoria Group of Insurance Companies, Sberbank Insurance and ASTK Insurance LLC, to provide cover beyond Feb. 20, when their licenses had been due to expire.
- (Reuters) Repsol aims to triple Venezuelan oil output after securing US permit
- (Reuters) Hungary's government is going to release 250,000 tons of crude oil from its strategic reserves after oil flows stopped on the Druzhba pipeline, the official journal of the government said in a decree published late on Thursday.
- (Reuters) Croatian pipeline operator JANAF must allow transit of Russian seaborne oil to Hungary and Slovakia during an outage of the Druzhba pipeline from Russia and this is in line with European and U.S. sanctions, Hungary's MOL Group, which operates refineries in the two countries, said on Friday. Media quoted a Croatian minister late on Thursday as reiterating that Croatia was ready to carry more oil for the two countries but not of Russian origin.
- (Reuters) American financier Gentry Beach, who has ties to U.S. President Donald Trump's family, signed an agreement with Russia’s energy giant Novatek last autumn to develop natural gas in Alaska amid Western sanctions against Russia, the New York Times reported on Friday.
Metals
- Gold (April) is +$70.00/oz, trading at $5,067.40/oz, while silver (March) is +$3.056/oz at $80.69/oz.
- The dollar index is +0.028 points at 97.953.
- (Reuters) CME Group has received an application to list a copper warehouse in a suburb of Chicago, a notice from the U.S. commodity exchange operator shows, as the prospect of import tariffs has led traders to stockpile. Kodiak Warehouse LLC has applied to take copper deliverable against the CME's Comex copper futures HGc1 in Lemont, Illinois, according to the notice dated February 18 that Reuters saw on Thursday.
- Interest Rates
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Financial Markets Morning Commentary
Financial Markets Morning Commentary
Tom Pawlicki
- Interest Rates
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