Feb 28, 2017 - Market Update

Short recap

Asia up on Wall Street and month-end flows

EU trading mixed

Trump met with Chinese official to talk about security and meeting with CN president

Abe/Kuroda – will keep stimulus in place

Some EU firms not able to repatriate profits from China (unconfirmed rumour)

But PBOC confirmed that companies use standard channels to do so

Saudis looking at crude oil around USD 60 level this year

Oil supported by OPEC cuts despite higher US production

But WTI may test 52.70 as the market can not break through 55.00

Banks refraining from commenting the political developments in order to avoid being biased

Fed’s Kaplan sent a strong message yesterday on rate hike (Mar 15 now priced at 50%)

Would need to have the same strong rhetoric from Yellen and Fisher as well

But FOMC may pre-confirm the May hike in March instead of rising rate

GE-FR spread contracts to 66 bps from 79 bps on Macron

Still some politics around new Scottish referendum

USDJPY

Likely range of 110-115 as a first reaction to Trump surprise good or bad

But all comes back to 10 yr US Trys yield

Data

Tue:

2^nd estimate of US GDP expecting at 2.1% vs 1.9% last month

US: House prices – expecting at 5.3%

US: Consumer confidence – expecting no change

Fed’s Williams, Bullard speaking

Trump speaking (1100) – recorded interview on Fox to be released

Trump at joint session of Congress (0200-0330 Wed morning)

Likely to express opinions and plans closer to Congress way of thinking in order to get his plans through

If not, would need to fight with Congress to get them approved

Will touch taxes and infrastructure but more details on taxes on Mar 13-14 as a part of the budget

During the speech to watch the reaction of 10 yr Trys yield (currently 2.36%) as the rest of the market will just follow

Support levels: 2.30%, 2.15% and 2.00%
Resistance at 2.52%

Good luck Champs!

Mr Hawk

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