U.S. Indices closed higher on Wednesday following a choppy session that saw plenty of two-way price action, but ultimately stocks ended up in the green with T-notes sold across the curve while the Dollar plummeted as the Euro rallied. The focus of the session was on US trade updates, the German Debt brake reform, and US data. On trade, following reports the US could dial back some tariffs on US and Canada if Trump was satisfied with progress on borders and fentanyl, the US decided to delay auto tariffs on Canada and Mexico by 30 days, although Trump told Canada’s Trudeau that they have not done enough on fentanyl imports into the US, albeit progress on borders has been reasonable. The White House also noted that Trump is open to hearing about additional tariff exemptions, which helped lift stocks higher into the close. Elsewhere, US data saw a woeful ADP print ahead of the NFP report on Friday, while the ISM Services PMI beat expectations. The Fed Beige Book, compiled with info on or before Feb 24th, saw overall economic activity rise slightly since mid-January, but consumer spending was lower on balance (more below). In Europe, the reform of the debt brake drove price action with the DAX surging over 3.5% while the Euro rallied from a low of 1.0603 to 1.0791 with German bund yields rising the most in one day since the 1990s. The Euro saw notable outperformance on the debt break reform, weighing on the Dollar, while Antipodes also outperformed on the Dollar weakness and ultimate upside in equities supporting the cyclical currencies. Crude prices tumbled regarding ongoing US consumer concerns hitting the demand side of the economy, with downside extending after OPEC+ earlier in the week agreed to proceed with the planned April output hike. ISM Services surpassed expectations in February, as it printed 53.5 (exp. 52.6, prev. 52.8). Within the release, new orders and employment rose to 52.2 (prev. 51.3) and 53.9 (prev. 52.3), while business activity was more or less unchanged at 54.4 (prev. 54.5). The inflationary gauge of prices paid rose to 62.6 from 60.4. Backlog of orders and inventories lifted back into expansionary territory, while new export orders printed 52.1 (prev. 50.0) and imports 49.6 (prev. 49.8). On the report, February was the third month in a row with all four sub-indices that directly factor into the Services PMI (Business Activity, New Orders, Employment and Supplier Deliveries) were in expansion territory, with the report noting the first time it has happened since May 2022. Nonetheless, anxiety continues over the potential impact of tariffs, as many of the respondents highlighted this, shown by one by the following: 1) “There is great uncertainty about future business activity due to the risk of tariffs and other potential government actions.” 2) “Implementation of tariffs will have a significant cost impact to our projects.” 3) “Tariffs are going to have a ripple down effect that could severely harm our business.” Separately, some respondents also indicated that federal spending cuts are having negative impacts on their business forecasts. Do note, heading into the release ING noted, “in theory this services index should be less affected by tariff noise”. The ADP’s gauge of national employment, while lacking significant predictive power for the official jobs data, disappointed expectations, printing 77k against an expected 140k. The report noted that hiring slowed to the smallest level of gains since July, with trade and transportation, health care and education, and information technology showing job losses, and small business employment also fell. “Policy uncertainty and a slowdown in consumer spending might have led to layoffs or a slowdown in hiring last month,” ADP said, “our data, combined with other recent indicators, suggests a hiring hesitancy among employers as they assess the economic climate ahead.” ECB policymakers are widely-expected to deliver another 25bps rate reduction at this afternoon’s announcement. Greater emphasis by the market will be placed on whether the Governing Council still views policy as restrictive and what, if any, hints are given about plans for a potential pause in the rate-cutting cycle. Elsewhere, the accompanying macro projections will be scrutinised to see how inflation is expected to align with the ECB’s 2% target. Elsewhere, Oil closed 2.86% lower while Gold was flat.
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For anyone following my Platinum Service it made 70 points yesterday and is now down by 196 points for March after closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1900 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
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