© Reuters. FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., February 23, 2024. REUTERS/Brendan McDermid/File Photo
LOW
-0.57%
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NCLH
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UHS
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WDAY
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US10Y…
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US5YT=X
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US2YT=X
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RSG
-0.07%
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FSLR
+1.18%
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USD/JPY
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A
-0.41%
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CL
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AEP
-2.04%
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SJM
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AMT
-1.24%
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HSIC
+0.89%
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EBAY
-0.30%
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JP225
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A look at the day ahead in U.S. and global markets from Mike Dolan
With stocks holding the bulk of recent stellar gains, more anxious bonds are back in focus – but Treasuries caught a decent break Tuesday during a heavy week for new debt sales and inflation updates.
Debt markets were unsettled on Monday as a record $127 billion of coupon debt was sold at two auctions of two- and five-year Treasury notes, with another $42 billion of seven-year notes under the hammer on Tuesday.
Demand for the paper managed to keep a lid on yields at last week’s two-month highs. And two- and 10-year yields ticked lower again overnight, with a mix of weather-related softness in U.S. new home sales data for January and this week’s latest congressional standoff over government funding in view.
While such heavy supply of new debt has become a feature of the market, tension has been added by the Federal Reserve’s stubborn refusal to cut interest rates early as it continues to scour the inflation landscape for signs of heat.
Kansas City Fed boss Jeffrey Schmid toed that line again on Monday and used a debut speech on policy to restate the focus on the threat of high inflation and patience in cutting rates.
And that picture is not going to be any clearer before the important PCE inflation gauge is released on Thursday.
In the meantime, the energy price backdrop to the inflation story remained confused amid conflicting signals from the Middle East. Renewed attacks on shipping in the Red Sea were juxtaposed with some signs of a breakthrough in Gaza ceasefire talks.
While also due to meet congressional leaders today over the government funding hiatus, U.S. President Joe Biden said overnight that Israel had agreed to halt its Gaza attacks for the Muslim holy month of Ramadan – as Hamas reviewed a truce deal that includes a prisoner-hostage swap.
With the two issues linked, Biden’s comments came as U.S. Central Command claimed Yemen’s Iran-aligned Houthis had unsuccessfully fired a missile at the U.S.-flagged oil tanker Torm Thor in the Gulf of Aden on Feb. 24.
Adding to mix, Russia ordered a six-month ban on gasoline exports from March 1.
Parsing all of that, U.S. crude prices were a fraction higher on Tuesday – although well off last week’s 3-month highs.
Back on Wall St, the tail end of the corporate earnings season plays out while the macro diary is topped by February consumer confidence readings.
Overseas, Japan’s core consumer inflation slowed for a third straight month in January but failed to fall below the central bank’s 2% target as expected, keeping alive expectations the Bank of Japan will end negative interest rates by April.
However, questions about longer-term deflationary conditions in the world’s fourth-biggest economy were underlined by data showing the number of babies born in Japan fell for an eighth straight year to a fresh record low in 2023.
The buoyant Nikkei 225 held steady at new record highs, but the yen firmed up a touch.
Stocks were generally higher across the world on Tuesday – with China’s main indexes advancing again and artificial intelligence stocks there jumped 5.2%.
With many now awaiting the next policy moves from the National People’s Congress on March 5, much of the focus remained on new regulatory moves to stem capital flight and market speculation.
Standard Chartered said it had suspended new investments by its clients in China into offshore products via a quota-based channel amid a surge in demand for overseas investments due to weakness in the local market and currency.
Elsewhere, Bitcoin – now up more than 10% in two sessions – hit a two-year high on Tuesday on signs of large players buying cryptocurrency, while smaller rival ether topped $3,200 for the first time since 2022.
A bitcoin ‘halving’ event in April – a process designed to slow the release of bitcoin – is now on the radar.
Key diary items that may provide direction to U.S. markets later on Tuesday:
* U.S. Feb consumer confidence, Jan durable goods orders, Dec home prices, Richmond Fed Feb business survey, Dallas Fed service sector survey
* Kansas City Federal Reserve President Jeffrey Schmid, Fed Vice Chair for Supervision Michael Barr speak; Bank of England Deputy Governor Dave Ramsden speaks
* U.S. Treasury Secretary Janet Yellen holds a press conference ahead of G20 and G7 finance meetings in Brazil
* U.S. Treasury auctions 7-year notes
* U.S. corp earnings: Workday (NASDAQ:WDAY), Universal Health (NYSE:UHS), eBay (NASDAQ:EBAY), Agilent (NYSE:A), Axon, Constellation Energy, Sempra, Lowe’s (NYSE:LOW), JM Smucker (NYSE:SJM), American Tower (NYSE:AMT), Republic Services (NYSE:RSG), First Solar (NASDAQ:FSLR), American Electric Power (NASDAQ:AEP) Co, Henry Schein (NASDAQ:HSIC), Pinnacle West, Norwegian Cruise Line (NYSE:NCLH)
(By Mike Dolan, Editing by Bernadette Baum; [email protected])
Source: Investing.com