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MNI US OPEN: Equity Rally Pauses



Fig. 1: Yen Weakness Extends

Source: BBG, MNI


RUSSIA-UKRAINE (BBG): Russian President Vladimir Putin told German Chancellor Olaf Scholz that Ukraine is trying to “stall” talks by putting out “more and more new unrealistic demands,” according to the readout of the phone talks from the Kremlin. Says Russia is ready to work to find solution, Moscow’s conditions are “well-known”.

RUSSIA-GERMANY (BBG): German Chancellor Olaf Scholz spoke on the phone with Russian President Vladimir Putin on Friday morning, according to emailed statement from the German chancellery.Chancellery says Scholz urged the Russian President to work toward a cease-fire as soon as possible, to improve the humanitarian situation and to make progress in finding a diplomatic solution to the conflict.

BANK OF JAPAN (MNI STATE OF PLAY): Bank of Japan Governor Haruhiko Kuroda said on Friday that Japan’s core consumer prices may rise to 2% on the back of high import prices and the fading impact of cheap mobile phone charge in or after April but will not cause any policy adjustments. “The rapid rise in commodity prices (caused by the Russia’s invasion of Ukraine) will boost (Japan’s) import prices and then push up core CPI to close to 2%,” Kuroda told reporters.

BANK OF RUSSIA (BBG): President Vladimir Putin proposed a new term for Bank of Russia Governor Elvira Nabiullina, according to a statement on the State Duma’s website Friday. The lower house of parliament’s council will consider the proposal on March 21, according to the statement. Nabiullina has led the Bank of Russia through multiple crises since 2013, gaining global recognition as a hawkish technocrat focused on fighting inflation even at the expense of economic growth.

LME / NICKEL (BBG): Nickel dropped by the maximum allowed for a third day in another glitchy opening for trading in London, as the price continues its retreat from an unprecedented short squeeze last week. It was the third straight day that electronic trading in LME nickel had suffered from apparent glitches, as the LME has run into problems with its new trading limits, which were introduced for the first time in the wake of last week’s price runaway price spike. Nickel dropped 12% to the daily limit of $36,915 a ton, although at least three trades went through at a price below the lower bound set by the exchange, according to Bloomberg data. The trades outside of the limit will be canceled, a spokesperson for the LME said.

CHINA-US (RTRS): China sailed an aircraft carrier through the sensitive Taiwan Strait on Friday, shadowed by a U.S. destroyer, a source with direct knowledge of the matter said, just hours before the Chinese and U.S. presidents were due to talk. China claims democratically ruled Taiwan as its own territory, and has over the past two years stepped up its military activity near the island to assert its sovereignty claims, alarming Taipei and Washington. The source, who was not authorised to speak to the media and spoke on condition of anonymity, told Reuters the carrier Shandong sailed close to the Taiwan-controlled island of Kinmen, which sits directly opposite the Chinese city of Xiamen.

OIL (BBG): Oil extended gains after the biggest daily surge in 16 months pushed prices back above $100 a barrel as the Kremlin cast doubt on the progress of peace talks with Ukraine. Futures in New York rose to trade near $106 a barrel after jumping 8.4% on Thursday. Crude rallied after the Kremlin said a report of major progress in negotiations over Ukraine was “wrong,” but that discussions will continue. Oil is still set for a second weekly loss after another tumultuous period of trading that’s seen West Texas Intermediate swing over $9 in three sessions.


FIXED INCOME: Gilts outperform, continue to price in more dovish BOE

Gilts are outperforming as they continue to re-price following yesterday's dovish MPC meeting, while the rest of core fixed income is drifting higher this morning, with little in the way of headline drivers.

  • The biggest moves this morning have been at the front-end of the UK curve with SONIA futures up to 12.5 ticks higher on the day at writing. 2-year gilt yields down 7.0bp with the curve bull steepening.
  • Treasuries have outperformed Bunds a little. The UST curve is bull flattening while the German curve is seeing more of a parallel shift.
  • Looking ahead, we have the first Fed-talk since the FOMC presser with Waller, Kashkari, Barkin and Bowman all due to speak today but the data calendar is light with Eurozone trade data and US existing home sales the highlights.
  • TY1 futures are up 0-8 today at 124-18+ with 10y UST yields down -2.1bp at 2.152% and 2y yields up 0.4bp at 1.921%.
  • Bund futures are up 0.32 today at 161.33 with 10y Bund yields down -1.4bp at 0.368% and Schatz yields down -1.7bp at -0.364%.
  • Gilt futures are up 0.49 today at 122.29 with 10y yields down -4.1bp at 1.521% and 2y yields down -7.0bp at 1.216%.

FOREX: JPY Under Early Pressure

  • Markets are extending the risk-on move posted since Wednesday's Fed rate decision, resulting in JPY being the poorest performer in G10 so far Friday. This keeps USD/JPY upside under pressure with the cycle highs of 119.12 in view. A break above here opens levels not seen since early 2016.
  • Russia-Ukraine tensions remain front and centre, with Russia's President Putin speaking with the German Chancellor this morning, noting the Ukrainian demands in peace talks as "unrealistic". Putin speaks with Macron later in the day.
  • CHF and CAD outperform, while the greenback trades more mixed. The EUR retraces a part of recent impressive gains, but the bias remains for further corrective rallies.
  • Focus turns to any outcomes from today's meeting between US President Biden and his Chinese counterpart Xi - who are due to discuss Sino-US relations and, inevitably, the ongoing Ukraine crisis. On the data front, Canadian retail sales and US existing home sales are the focus.
  • Fed speakers will also draw attention, with Kashkari, Barkin and Bowman the first FOMC members to comment since Powell's press conference on Wednesday.

EQUITIES: Modest Retracement

  • Asian markets closed mostly higher (though the Hang Seng gave back a modest portion of recent outsized gains): Japan's NIKKEI closed up 174.54 pts or +0.65% at 26827.43 and the TOPIX ended 10.26 pts higher or +0.54% at 1909.27. China's SHANGHAI closed up 36.029 pts or +1.12% at 3251.073 and the HANG SENG ended 88.83 pts lower or -0.41% at 21412.4
  • European equities are a little weaker, with the German Dax down 77.88 pts or -0.54% at 14399.02, FTSE 100 down 9.5 pts or -0.13% at 7385.34, CAC 40 down 31.9 pts or -0.48% at 6612.52 and Euro Stoxx 50 down 11.5 pts or -0.3% at 3889.93.
  • U.S. futures are pointing lower as well, with the Dow Jones mini down 171 pts or -0.5% at 34290, S&P 500 mini down 26.25 pts or -0.6% at 4384, NASDAQ mini down 91.75 pts or -0.65% at 14020.

COMMODITIES: Oil Continues To Gain Ground Above $100

  • WTI Crude up $1.58 or +1.53% at $104.37
  • Natural Gas down $0.14 or -2.83% at $4.836
  • Gold spot down $9.31 or -0.48% at $1932.9
  • Copper up $0.2 or +0.04% at $471.75
  • Silver down $0.11 or -0.42% at $25.3084
  • Platinum up $7.19 or +0.7% at $1029.69


18/03/20221000/1100*EUTrade Balance
18/03/20221230/0830**CARetail Trade
18/03/20221400/1000***USNAR existing home sales
18/03/20221720/1320USRichmond Fed's Tom Barkin
18/03/20221800/1400USChicago Fed's Charles Evans
18/03/20221800/1400USFed Governor Michelle Bowman
21/03/20220300/1100CNPBOC LPR decision
21/03/20220730/0830EUECB Lagarde at Institut Montaigne Event
21/03/20221000/1100**EUConstruction Production
21/03/20221200/0800USAtlanta Fed's Raphael Bostic
21/03/20221530/1130*USUS Treasury Auction Result for 26 Week Bill
21/03/20221530/1130*USUS Treasury Auction Result for 13 Week Bill
21/03/20221600/1200USFed Chair Jerome Powell
21/03/20221600/1200USRichmond Fed's Tom Barkin
22/03/20220700/0700***UKPublic Sector Finances
22/03/20220730/0830EUECB de Guindos in Panel at Money Review Banking Summit
22/03/20220900/1000**EUEZ Current Acc
22/03/20221100/1100**UKCBI Industrial Trends
22/03/20221230/0830**USPhiladelphia Fed Nonmanufacturing Index
22/03/20221255/0855**USRedbook Retail Sales Index
22/03/20221300/1400EUECB Panetta Opening CCP Risk Management Conference
22/03/20221400/1000**USRichmond Fed Survey
22/03/20221515/1515UKBOE Cunliffe Panels BIS Innovation Summit
22/03/20221530/1130**USUS Treasury Auction Result for 52 Week Bill
22/03/20221730/1830EUECB Lane Panels Discussion on Flexible Exchange Rates
22/03/20221800/1400USSan Francisco Fed's Mary Daly
22/03/20222100/1700USCleveland Fed's Loretta Mester
23/03/20220001/0001*UKXpertHR pay deals for whole economy
23/03/20220700/0700***UKConsumer inflation report
23/03/20221100/0700**USMBA Weekly Applications Index
23/03/20221100/0700USFed Chair Jerome Powell
23/03/2022-UKOBR Economic and Fiscal Forecast
23/03/2022-UKDMO 2022-23 Financing Remit
23/03/20221200/1200UKBOE Bailey Panels BIS Innovation Summit
23/03/20221230/1230UKFY 2022/23 Budget statement
23/03/20221315/1415EUECB Lagarde Speech at BIS Innovation Summit
23/03/20221400/1000***USNew Home Sales
23/03/20221430/1030**USDOE weekly crude oil stocks
23/03/20221435/1035USNew York Fed's John Williams
23/03/20221500/1600**EUConsumer Confidence Indicator (p)
23/03/20221530/1530UKDMO Quarterly Consultation Meetings Agenda
23/03/20221530/1130**USUS Treasury Auction Result for 2 Year Floating Rate Note
23/03/20221545/1145USSan Francisco Fed's Mary Daly
23/03/20221700/1300**USUS Treasury Auction Result for 20 Year Bond
23/03/20221900/1500USSt. Louis Fed's James Bullard
24/03/20222200/0900***AUIHS Markit Flash Australia PMI
24/03/20220030/0930**JPIHS Markit Flash Japan PMI
23/03/20220105/2105USSt. Louis Fed's James Bullard
24/03/20220745/0845**FRManufacturing Sentiment
24/03/20220815/0915**FRIHS Markit Services PMI (p)
24/03/20220815/0915**FRIHS Markit Manufacturing PMI (p)
24/03/20220830/0930CHSNB interest rate decision
24/03/20220830/0930***CHSNB policy decision
24/03/20220830/0930**DEIHS Markit Services PMI (p)
24/03/20220830/0930**DEIHS Markit Manufacturing PMI (p)
24/03/20220900/1000***NONorges Bank Rate Decision
24/03/20220930/0930***UKIHS Markit Manufacturing PMI (flash)
24/03/20220930/0930***UKIHS Markit Services PMI (flash)
24/03/20220930/0930***UKIHS Markit Composite PMI (flash)
24/03/20220930/1030EUECB Elderson at IIEA Webinar
24/03/20221100/1100**UKCBI Distributive Trades
24/03/2022-EUECB Lagarde at European Council Meeting
24/03/20221230/0830**USJobless Claims
24/03/20221230/0830**USdurable goods new orders
24/03/20221230/0830*USCurrent Account Balance
24/03/20221230/0830**USWASDE Weekly Import/Export
24/03/20221300/1300UKBOE Mann Panels Institute of International Finance event
24/03/20221300/1400EUECB Elderson in Panel at LSE
24/03/20221345/0945***USIHS Markit Manufacturing Index (flash)
24/03/20221345/0945***USIHS Markit Services Index (flash)
24/03/20221350/0950USChicago Fed's Charles Evans
24/03/20221430/1030**USNatural Gas Stocks
24/03/20221500/1100USAtlanta Fed's Raphael Bostic
24/03/20221530/1130**USNY Fed Weekly Economic Index
24/03/20221700/1300**USUS Treasury Auction Result for TIPS 10 Year Note
24/03/20221900/1500***MXMexico Interest Rate
MNI London Bureau | +44 203-865-3809 |
MNI London Bureau | +44 203-865-3809 |

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