MNI US OPEN: Fed Hike Expectations Up Again Pre-Minutes

MNI: EUROZONE MAR CONSTRUCTION PMI 52.8; FEB 56.3

*MNI: UK MAR CONSTRUCTION PMI 59.1; FEB 59.1

MNI: GERMANY FEB FACTORY ORDERS -2.2% M/M, +2.9% Y/Y; JAN +8.2%r Y/Y

February New Factory Orders Slump Below Forecasts

GERMANY FEB FACTORY ORDERS -2.2% M/M, +2.9% Y/Y; JAN +8.2%r Y/Y

• German new manufacturing orders were significantly below forecasts.
• Factory orders fell 4.5pp to a contractive -0.3% m/m and by 5.3pp to +2.9% y/y.
• Analysts were forecasting softer decreases of 2.6pp and 2.8pp respectively.
• Both January numbers were revised upwards, with the year-on-year growth revised up 0.9pp to +8.2%.
• The strong January growth was on the back of foreign demand growth, which slumped substantially in February.
• Foreign orders were responsible for the bulk of the decrease, falling -3.3% m/m. Eurozone orders also fell by -3.3% m/m.
• The data largely predates the 24/2 start of the Ukraine invasion and associated further inflationary pressures and worsening of supply-chain disruption.

MNI: EUROZONE FEB PPI +1.1% M/M, +31.4% Y/Y, JAN +30.6% Y/Y

Eurozone Factory-Gate Inflation at Record +31.4%

EUROZONE FEB PPI +1.1% M/M, +31.4% Y/Y, JAN +30.6% Y/Y

• Euro area PPI reached a fresh record high at +31.4% y/y in the February print.
• Core PPI rose 12.2% y/y from +11.8% in January.
• Eurozone factor-gate inflation was only slightly softer than the consensus forecast in February at +1.1% m/m (0.1pp below forecast) and by +31.4% y/y (0.2pp below forecast).
• On the month, intermediate goods rose 1.6%, with energy sector goods up 1.3%.
• Slovakia (+13.6%), Slovenia (+5.7%) and Greece (+4.8%) saw the greatest monthly accelerations, however, Ireland saw a substantial slowdown (-8.1%).
• This data at large predates further upwards pressures of the Ukraine invasion, which has seen energy prices soar further.

FIXED INCOME: USTs continue descent ahead of FOMC Minutes

• Treasuries have continued their slide after the hawkish comments from Brainard yesterday, and ahead of today's FOMC Minutes. The focus of the Minute will be on the language surrounding the pace and timing of tapering, and also on any language around the likelihood of 50bp hikes in upcoming FOMC meetings.
• Gilts have been dragged lower by Treasuries, too, with the German curve also lower but seeing smaller moves than gilts or USTs.
• Looking ahead we have more comments from ECB's Lane as he participates in a panel on inflation dynamics but there is little else on the calendar.
• There is still continued focus on le Pen moving up in the polls for the French election (albeit still at as a major underdog to Macron's reelection). OAT-Bund spreads are little changed today, but peripheral spreads are a little wider.
• TY1 futures are down -0-15+ today at 120-14 with 10y UST yields up 7.1bp at 2.620% and 2y yields up 3.9bp at 2.556%.
• Bund futures are down -0.48 today at 157.25 with 10y Bund yields up 3.8bp at 0.649% and Schatz yields up 1.5bp at -0.14%.
• Gilt futures are down -0.48 today at 120.34 with 10y yields up 6.1bp at 1.713% and 2y yields up 5.3bp at 1.501%.

FOREX: USD Backtracks Small Part of Post-Brainard Move

• The greenback is edging lower into the NY crossover, helping major pairs including EUR/USD and GBP/USD recover off the session lows. Despite the USD slipping lower over the past few hours, markets are yet to recover a major part of the post-Brainard moves posted yesterday, after the FOMC member argued in favour of a much faster, swifter QT process relative to post-Global Financial Crisis policy.
• There's a tentative sense of risk-off evident in equity markets, with most continental indices lower by 1% or more, with continued weakness evident in French names as the polling lead for incumbent Macron narrows over his right-wing contender Marine Le Pen.
• In contrast to stocks, haven currencies are weaker so far Wednesday, putting CHF and JPY at the bottom of the G10 pile. GBP and NZD are the firmest currencies so far, but recent ranges are largely being respected.
• Data is few and far between Wednesday, with no major G10 releases outside of the Canadian Ivey PMI due at 1500BST/1000ET. This should keep the central bank speaker docket in the spotlight, with ECB's Lane and Knot due, as well as Fed's Harker and the much-watched release of the Fed minutes.

EQUITIES: European Stocks Lower With Tech, Consumer Discretionary Underperforming

• Asian markets mostly closed lower: Japan's NIKKEI closed down 437.68 pts or -1.58% at 27350.3 and the TOPIX ended 26.21 pts lower or -1.34% at 1922.91. China's SHANGHAI closed up 0.709 pts or +0.02% at 3283.426 and the HANG SENG ended 421.79 pts lower or -1.87% at 22080.52.
• European stocks are weaker, with the German Dax down 161.5 pts or -1.12% at 14236.43, FTSE 100 down 44.58 pts or -0.59% at 7570.16, CAC 40 down 82.58 pts or -1.24% at 6563.46 and Euro Stoxx 50 down 49.88 pts or -1.27% at 3862.14.
• U.S. futures are a little lower, with the Dow Jones mini down 91 pts or -0.26% at 34458, S&P 500 mini down 14.75 pts or -0.33% at 4505.5, NASDAQ mini down 83.5 pts or -0.56% at 14743.

COMMODITIES: WTI Bounces Back From Sub-$100 Overnight Low

• WTI Crude up $1.31 or +1.28% at $103.17
• Natural Gas up $0.09 or +1.51% at $6.121
• Gold spot up $3.42 or +0.18% at $1925.81
• Copper down $1.65 or -0.34% at $477.65
• Silver up $0.04 or +0.18% at $24.3345
• Platinum up $0.35 or +0.04% at $971.73