Forex - Rates Highlights - 16 Feb 2017

 05:42 (GMT) 16 Feb

  [Forex Highlights]

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Rates Highlights - 16 Feb 2017 (0100-LNVX-C01)

T. Bonds: USTs find some capping at big figure yield levels, keeping current action ambiguous. Futures toy with key trendline support levels too.

Bunds and Gilts: DE30s stretching towards the yield year range highs again (1.25%~) led by US action. Greece still lurks in the background as an issue meanwhile

JGB: Prices likely to trade within a range of 149.75-150.00 during the session.

DJIA and S&P: O/B posture not stopping the dash for higher levels at present. 2350 projection the next on S&P.

US Overview:

While equities pushed on, helped by Trump reiterating tax cut promise, the USD was unable to hold gains out of US data, instead selling the fact, while US yields also saw some capping at big figure yield levels.

US Highlights:

- US Jan CPI 0.6% m/m from 0.3 vs Mkt 0.3; ex Food & Energy 0.3% m/m from 0.2 vs Mkt 0.2

- US Jan Retail Sales 0.4% m/m from 1.0 vs Mkt 0.1; ex Auto 0.8% m/m from 0.4 vs Mkt 0.4

- US Feb Empire State Survey 18.7 from 6.5 vs Mkt 7

- US Jan Industrial production -0.3% m/m from 0.6 vs Mkt 0

- US Dec Business inventories 0.4% m/m from 0.8 vs Mkt 0.4

- US Feb NAHB homebuilders Index 65 vs 67 in Jan and exp.

- Fed's Yellen - quite close to achieving labor mkt objective; no unique level on where interest rates have to be before start reducing balance sheet

- Fed's Rosengren - may need to raise rates more than 3 times per year

- Fed's Harker - economy more or less back to full health

Asia-Pacific Highlights:

- China's central bank won't roll over some temporary liquidity facility loans at some major Chinese commercial banks, Reuters reports

- Japanese Finance Minister Taro Aso and U.S. Treasury Secretary Steven Mnuchin spoke by telephone on Thursday, the Ministry of Finance in Tokyo said.

- If we move to balance sheet normalization that might actually stretch out the process of raising short-term interest rates a bit" Dudley speaking Wednesday.

- Australia's unemployment rate unexpectedly fell in Jan, despite a plunge in full-time jobs, underscoring the mixed picture of the country's labor market.

- Most of the mortgage debt in Australia has been borrowed by those most able to service it, RBA Assistant Governor Luci Ellis says in comments

- Brent Oil: $55.75, -$0.22; Asia: $55.74, -$0.01

- T. Notes: 124.094, +0.125

- Treasuries: US news again at the centre of the action with the strong CPI, retail data prompting another follow through spike higher in yields, as the probability of a March hike was marked up to over 1-in-4 from 1-10 last week. Production data later missed but only on utilities, with manufacturing solid. Testing above the big figure reference levels (i.e. 2% on 5s, 2.5% on 10s etc...) did provide some consolidation, though hawkish comments from Rosengren gave yields some late support. 2s +1.6bps @ 1.25%, 5s +3.7bps @ 2.00%, 10s +3.1bps @ 2.50%, 30s +3.2bps @ 3.09%.

- Equities: Bourses continue the breakout momentum, running on for higher targets, even with overbought conditions, helped by data and comments from Trump reiterating plans to cut taxes and simplify the tax code.

- Europe: Spillover to EGBs from another UST hit again seen to some extent, mainly only at the long end in the case of bunds (steepening with 30s +3.5-4bp), though gilts retained some insulation thanks to the downside miss on UK average earnings earlier, with GB5s -1bp. Greek yields back under upward pressure again meanwhile, not helping Portugal (PT10s +6-7bp).

- Australia: After drifting lower in the overnight session, Aussie bonds continued to decline ahead of January's labour report. However, the weak numbers for full time employment saw prices rising up eventually. 3s opened at 97.950 and slipped to 97.900 before rising to 97.940 later on. Similarly, 10s opened at 97.170 and fell to 97.145 before returning to the opening levels once again.

- Japan: JGB futures opened at 149.89 and mainly bounced within a narrow range of 149.87-92 in the first half of the day while Nikkei lost over 0.5% during the period.

Rates Highlights - 16 Feb 2017 (0100-LNVW-C01)


AU: Employment (Jan) 13.5 chg k (Mkt: 10 Prev: 16.3R)

AU: Unemployment (Jan) 5.7% (Mkt: 5.8 Prev: 5.8)

Still To Be Released -


06:30 GMT - FR: ILO Unemployment Rate (Q4) % (Mkt: 9.8 Prev: 10)

06:30 GMT - NL: Unemployment (sa) (Jan) % (Prev: 5.4)

08:30 GMT - SE: SCB Unemployment (nsa) (Jan) % (Mkt: 7.3 Prev: 6.5)

09:00 GMT - IT: EU Trade balance (Dec) EUR mn (Prev: 235)

09:00 GMT - IT: Total Trade Balance (Dec) EUR mn (Prev: 4203)

13:30 GMT - US: Building Permits (Jan) 4cast: 1240k (Mkt: 1230 Prev: 1228)

13:30 GMT - US: Housing Starts (Jan) 4cast: 1220k (Mkt: 1226 Prev: 1226)

13:30 GMT - US: Initial Claims (42777) k (Mkt: 245 Prev: 234)

13:30 GMT - US: Philadelphia Fed Survey (Feb) (Mkt: 18 Prev: 23.6)

Events & Auctions:

22:00 GMT - AU: RBA's Ellis Speaks

23:00 GMT - NZ: Finance Minister Joyce Speaks

00:15 GMT - US: Fed's Dudley Speaks in New York

01:00 GMT - JP: Bloomberg Feb Economic Survey

11:15 GMT - SE: Riksbank's Ohlsson Speaks in Linkoping, Sweden

13:00 GMT - EU: EU's Moscovici Speaks in Vienna

14:00 GMT - EU: ECB's Coeure Speaks in Maastricht

14:05 GMT - SE: Riksbank's Skingley Speaks in Stockholm

15:00 GMT - EU: ECB's Nowotny Speaks in Vienna

18:00 GMT - NO: Norges' Olsen Speaks in Oslo

18:30 GMT - EU: EU's Juncker Speaks in Munich

21:00 GMT - NZ: 6-Month Fiscal Statement Released

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