USA Initial Jobless Claims, Building Permits (MoM), Housing Starts (MoM) & USA Philadelphia Fed Manufacturing Index

USA Initial Jobless Claims, Building Permits (MoM), Housing Starts (MoM) & USA Philadelphia Fed Manufacturing Index

USA Initial Jobless Claims for Mar 11 214.000K vs 248.000K Prior

USA Building Permits (MoM) for Feb (1.900)% vs 0.500% Prior

USA Housing Starts (MoM) for Feb 6.800 vs (4.100) Prior

USA Philadelphia Fed Manufacturing Index for Mar 27.400 vs 18.000 Est; Prior 16.000

 

Futures Drop as Treasuries Signal Growth Concern: Markets Wrap

  • Kremlin damps peace-talks hopes, further denting risk appetite
  • European stocks pare gains; oil rises toward $100 a barrel

U.S. futures declined after the Kremlin poured cold water on reports of progress in Ukraine peace talks, adding to worries about the outlook for economic growth as the Federal Reserve’s campaign against inflation gets underway.

Contracts on the S&P 500 and Nasdaq 100 fell, signaling a pause for U.S. stocks after the best two-day rally since 2020. The Stoxx Europe 600 index turned lower. Kremlin spokesman Dmitry Peskov dismissed reports that the warring parties are moving closer to a settlement, blaming Kyiv for slowing the negotiations. Futures were already wavering as the bond market flagged a growing risk that the Fed’s efforts to rein in prices could trigger an economic downturn.

The Fed raised borrowing costs by a quarter percentage point and signaled hikes at all six remaining meetings in 2022, while projecting the policy rate at 2.8% by the end of 2023. Chair Jerome Powell said the U.S. economy is “very strong” and can handle monetary tightening. Treasuries advanced, while a portion of the bond curve — the gap between five- and 10-year yields — inverted for the first time since March 2020, usually a sign investors expect economic hardship.

“This type of normalization policy does not always end well,” said Nicolas Forest, global head of fixed income at Candriam Belgium SA. “While the Fed began its tightening cycle later than usual, at a time when inflation has never been so high, financial conditions could also harden, making the 2.80% target ambitious in our view. In this context, it is easy to understand why the U.S. curve has flattened.”

Flattening of Treasury yield curve has led one section to invert

The dollar was steady against a basket of peers, while the euro gained after data showed a record surge in energy boosted euro-area inflation more than initially reported in February. WTI crude oil snapped a three-day drop to head toward $100 a barrel. European natural gas prices rose after Russian pipeline shipments to Germany dropped, stoking traders’ concerns of potential supply disruptions amid the war in Ukraine.

The Fed said it would begin allowing its $8.9 trillion balance sheet to shrink at a “coming meeting,” without elaborating. The U.S. central bank is among a number from Brazil to the U.K. that are raising borrowing costs. The commodity shock from Russia’s war in Ukraine is continuing to aggravate price pressures and economic risks, portending more market volatility.

Russia continues to “hammer” cities like Kharkiv and Cherniyiv with bombardments and rocket systems and isn’t acting like it wants to settle, Pentagon spokesman John Kirby said in an interview with Bloomberg TV.

Meanwhile, Russia’s Finance Ministry said a $117 million interest payment due on two dollar bonds had been made to Citibank in London amid mounting speculation that the country is heading for a default. Russia had until the end of business Wednesday to honor the coupons on the two notes. The ruble gained for a sixth day in Moscow trading, while the country’s stock market remains shut.

Elsewhere, the British pound declined and gilts rallied as money markets pared bets on further rate hikes from the Bank of England after it raised its key rate on Thursday.

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Here are some key events to watch this week:

  • ECB President Christine Lagarde, Executive Board member Isabel Schnabel, Governing Council member Ignazio Visco and Chief Economist Philip Lane speak at a conference, Thursday
  • Bank of Japan rate decision, Friday

Some of the main moves in markets:

Stocks

  • Futures on the S&P 500 fell 0.4% as of 8:32 a.m. New York time
  • Futures on the Nasdaq 100 fell 0.5%
  • Futures on the Dow Jones Industrial Average fell 0.3%
  • The Stoxx Europe 600 fell 0.3%
  • The MSCI World index rose 0.7%

Currencies

  • The Bloomberg Dollar Spot Index was little changed
  • The euro rose 0.1% to $1.1048
  • The British pound fell 0.3% to $1.3114
  • The Japanese yen was little changed at 118.74 per dollar

Bonds

  • The yield on 10-year Treasuries declined two basis points to 2.16%
  • Germany’s 10-year yield was little changed at 0.39%
  • Britain’s 10-year yield declined seven basis points to 1.56%

Commodities

  • West Texas Intermediate crude rose 5.5% to $100.26 a barrel
  • Gold futures rose 1.4% to $1,936.60 an ounce

— With assistance by Sunil Jagtiani