U.S. Indices resumed to the downside on Tuesday, with major Indices closing well in the red. Sectors were also predominantly lower, aside from Energy and Health Care, but the heavyweight indices saw the most downside with Communication, Consumer Discretionary and Tech underperforming. T-Notes were ultimately firmer across the curve due to the risk off trade, with upside supported ahead of settlement following the strong 20-year bond auction. Nonetheless, T-Notes did hit lows in the wake of the US data, which saw hotter than expected import and export prices, strong housing data and encouraging IP/Manufacturing data – albeit the data is yet to incorporate the impact of Trump tariff policies. As such, the Atlanta Fed GDPNow estimate was revised up to -1.8% from -2.1%. Aside from data, focus was largely on the callout between US President Trump and Russian President Putin, who did not agree to a full ceasefire in Ukraine, but did agree to a 30-day ceasefire on energy and infrastructure assets. Elsewhere on geopolitics, the Houthis announced they are at war with the US and warned that their attacks would continue, despite appeals from Iran. On trade, the Wall Street Journal reported that Trump’s team explored a simplified plan for reciprocal tariffs in which they recently debated sorting trading partners into one of three tiers instead of equalising tariff rates with every nation. Meanwhile, US Treasury Secretary Bessent noted that tariffs could be stacked on top of steel and aluminium tariffs, noting reciprocal tariffs won’t be an automatic 25% plus 25%. In commodities, crude prices settled lower but chopped to geopolitics ahead of inventory data after hours while gold prices extended to fresh record highs amid risk-off sentiment. Nvidia (NVDA) shares closed red despite a slew of announcements at the GTC. Attention turns to BoJ overnight and the FOMC this afternoon. U.S. Import Prices rose by 0.4% M/M in February, hotter than the -0.1% forecast and matching the prior upwardly revised pace. The report highlights that higher fuel and non-fuel prices in February contributed to the overall increase. Fuel imports rose 1.7% in Feb (prev. 3.5%), while all imports ex-fuel rose 0.3% (prev. 0.1%). Export prices rose 0.1%, above the -0.2% forecast but down from the prior 1.3% pace. Higher prices for non-agricultural and agricultural exports each contributed to the increase in February. Agricultural exports rose 0.8% (prev. 0.2%), while all exports ex-agriculture rose 0.1% (prev. 1.5%). The hotter-than-expected import prices may add to upside risk to the PCE report due on 28th March, with Core PCE currently expected at 0.34%, with the headline at 0.31%. U.S. Housing Starts rose 11.2% to 1.501 million in February, above the expected 1.38 million and the prior 1.350 million. Building Permits fell 1.2% to 1.456 million from 1.473 million, but still above Wall St. consensus of 1.453 million. On starts, Pantheon notes the normalisation of the weather, after unseasonably cold temperatures and heavy snowfall in January, was the main driver of the recovery. In addition, single-family permits, which are insensitive to the weather, edged lower to 992k from 994k, which Pantheon says suggests most of February’s 11.4% jump in single-family starts will reverse in March. Meanwhile, multi-family activity was little changed M/M, with starts edging higher to 393k, from 373k, but permits fell to 464k, from 479k. PM adds that during the election campaign, President Trump pledged to open up land owned by the federal government for development, slash regulations and slacken permit requirements. But in the near term, the new administration’s agenda will weigh on demand for new homes. Overall, the consultancy notes that the threats of tariffs and spending cuts are weighing heavily on consumers’ confidence, fully countering any support to demand for new homes from the recent small fall in mortgage rates. Ahead, Pantheon Macroeconomics expect total starts to fall back to the low 1.35 million levels seen in the first half of 2024 over the coming months. Industrial Production rose 0.7% in February (exp. 0.2%), from the downwardly revised 0.3% January increase. Manufacturing output, which accounts for 78% of total industrial production rose 0.9% above the expected 0.3% (prev. -0.1%, rev. 0.1%), supported by an 8.5% jump in the index for motor vehicles and parts. On the 8.5% jump, Capital Economics notes “This was unsurprising given the weakness in motor vehicle production in recent months and leaves output still down from its 2024 average in level terms”. Meanwhile, manufacturing of ex-motor vehicles and parts rose by 0.4%. Mining output grew 2.8% (prev. -3.2%) and utility output fell by 2.5%, weighed on by output for electric and natural utilities falling by 1.2% and 11.1% respectively. Separately, Capacity Utilisation was 78.2% (exp. 77.8%, rev. 77.7%). Ahead, Capeco, believes there is a downside to come for the industry over the coming months, given that the drag from tariffs is still yet to properly take effect. The phone call between US President Trump and Russian President Putin did not agree to a full ceasefire, but it did agree to a 30-day ceasefire on energy and infrastructure assets. The White House noted that “the leaders agreed that the movement to peace will begin with an energy and infrastructure ceasefire, as well as technical negotiations on the implementation of a maritime ceasefire in the Black Sea, full ceasefire and permanent peace. These negotiations will begin immediately in the Middle East.” The Kremlin Readout however did note that sticking points remain, and the two sides will set up expert groups on Ukrainian settlement, but Putin does support the idea of not hitting energy facilities for 30 days. The two also agreed to start talks and work something out about the safety of shipping in the Black Sea. Ukraine President Zelensky responded, in which he said Ukraine would support a proposal to stop strikes on energy and infrastructure, noting Ukraine will support any proposals that lead to stable and just peace. He suggested Kyiv’s partners would not agree to stop military aid and hopes it will continue. He noted that an unconditional or partially unconditional ceasefire would be a positive result as they are steps towards peace. However, Zelensky warned that Russia is preparing new offensives on Zaporizhzhia, Sumy and Kharkiv fronts in the coming months in order to exert maximum pressure on Ukraine. Zelensky also suggested that freeing all Ukrainian PoW would be a good way for Russia to really demonstrate goodwill at negotiations. The FOMC is widely expected to leave rates on hold at its March 19th meeting. This has been the expectation since January, when Fed Chair Powell stressed a no-rush approach to future changes in policy, given the uncertainties ahead. Expectations ahead are more uncertain, however. The current dot plot signals two more rate cuts in 2025; Governor Waller has suggested that this is still his base case. Market focus has heavily been on policies from US President Trump, particularly on trade and tariffs, as well as government cost-cutting efforts. The recent turmoil in markets has been underpinned by uncertainty, with Trump chopping and changing tariff policy frequently, and when combined with cost-cutting, has been raising fears around US economic growth, with recession fears rising. The Atlanta Fed’s GDPNow estimate was Q1 growth of -2.4%, however, when adjusted for gold imports, it rose from -0.4% to 0.4% after the February labour market report. Elsewhere, Oil closed lower by 0.31% while Gola again closed over $3000 with a gain of 0.7%.
To mark my 3150th issue of TraderNoble Daily Commentary I am offering a special 2-Year Rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day to demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoble.com for details
For anyone following my Platinum Service it made 1552 points yesterday and is now ahead by 1241 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
Recent Comments