MNI US OPEN: Dollar Strength Post-Minutes

MNI: GERMANY FEB IP +0.2% M/M, +3.2% Y/Y; JAN +1.4%r M/M

German IP Slows in February

FEB INDUSTRIAL PRODUCTION +0.2% M/M, +3.2% Y/Y; JAN +1.4%r M/M

• German IP was as forecasted at +0.2% m/m in February (+1.4% in Jan), with year-on-year growth somewhat below consensus at +3.2% y/y (vs +3.7% expected).
• Consumer goods production rose 4.4% and intermediate goods rose 0.5%, whilst capital goods saw a decline of 2.0%. Energy goods production rose a substantial 4.9% m/m.
• Compared to pre-pandemic February 2020, this year's print remained 3.8% weaker, due to input shortages which continue to hamper production.
• January's print saw substantial downwards revisions of 1.3pp on the month and 0.7pp on the year.

EUROZONE FEB RETAIL SALES +0.3% M/M, +5.0% Y/Y; JAN +8.4%r Y/Y

Retail Sales Edge Higher, Headwinds Appearing

EUROZONE FEB RETAIL SALES +0.3% M/M, +5.0% Y/Y; JAN +8.4%r Y/Y

EZ JAN RETAIL SALES REVISED UP 0.6PP to +8.4% Y/Y

• In February, eurozone retail trade rose 0.3% m/m (Jan: +0.2%), milder than the +0.5% m/m forecast.
• Retail trade grew by +5.0% y/y, 3.4pp slower than the strong upwardly-revised January print. Comparison to harsh lockdowns of Winter 2020/2021 is boosting this number.
• Automotive fuels retail trade saw a 3.2% increase, followed by +0.8% for non-food products.
• This data is largely pre-Ukraine invasion and acts as a benchmark for March data, which will incorporate the effects of substantial declines in consumer confidence.

FIXED INCOME: FI higher as markets focus on growth concerns following FOMC Minutes

• Markets have generally been drifting mildly higher this morning, but saw bigger moves through the Asian session as markets digested yesterday's FOMC Minutes. A faster pace of balance sheet wind down has led to some concerns over the growth outlook, with the Fed seemingly contemplating a 50bp hike in March (but most members were deterred by the Ukraine war).
• After being closed overnight, gilts are leading the moves today.
• Looking ahead we will receive the ECB Accounts of their monpol meeting, and given the surprisingly more hawkish tilt at the March meeting, these will be closely watched too. Any hints on how soon next steps could come and whether there is any scope to bring forward any expected policy moves are likely to be analysed.
• We will also hear from Fed's Bullard, Bostic and Evans as well as BOE's Pill (although the latter is just giving opening remarks at a conference for 15 minutes - so may not address much if anything on monpol).
• TY1 futures are up 0-12 today at 121-02 with 10y UST yields down -2.9bp at 2.571% and 2y yields down -3.8bp at 2.435%.
• Bund futures are up 0.53 today at 157.77 with 10y Bund yields down -2.8bp at 0.617% and Schatz yields down -3.7bp at -0.84%.
• Gilt futures are up 0.63 today at 120.82 with 10y yields down -3.6bp at 1.666% and 2y yields down -4.6bp at 1.406%.

FOREX: Greenback Holds Close to Cycle Highs as Fed Minutes Underpin

• The greenback remains solid following Wednesdays' Fed minutes release, which underlined the hawkish bias present among the FOMC. The USD Index touched a fresh cycle high at 99.769 following the release, putting the USD at the best levels since May 2020.
• The hawkish interpretation of the Fed minutes has been based on the Fed's speedy plans for the balance sheet roll-off, with the FOMC weighing a pace of reduction at $95bln per month, while accelerating the tightening cycle at a clip of 50bps at several rate decisions.
• GBP is among the strongest performers in G10 so far, with EUR/GBP extending the recent downtick to touch 0.8314. This narrows the gap with 0.8296, the next key support which marks the mid-March lows. Weakness through here opens 0.8276, the 76.4% retracement of the Mar 7 - 31 rally as well as 0.8203, the Low from March 7 and the current bear trigger.
• GBP, JPY are among the best performers in G10, while AUD, NZD are the weakest so far.
• Focus turns to the weekly US jobless clams release, as well as scheduled speeches from BoE's Pill, Fed's Bullard, Bostic and Evans.

EQUITIES: Asia Closes Lower; Energy Names Lag In Europe

• Asian stocks closed lower: Japan's NIKKEI closed down 461.73 pts or -1.69% at 26888.57 and the TOPIX ended 30.01 pts lower or -1.56% at 1892.9. China's SHANGHAI closed down 46.731 pts or -1.42% at 3236.695 and the HANG SENG ended 271.54 pts lower or -1.23% at 21808.98.
• European futures are mixed, with the German Dax up 66.29 pts or +0.47% at 14207.28, FTSE 100 down 27.3 pts or -0.36% at 7584.37, CAC 40 up 19.07 pts or +0.29% at 6498.83 and Euro Stoxx 50 up 23.02 pts or +0.6% at 3848.57.
• U.S. futures are up slightly, led by tech: Dow Jones mini up 4 pts or +0.01% at 34403, S&P 500 mini up 9 pts or +0.2% at 4484.75, NASDAQ mini up 68.5 pts or +0.47% at 14573.75.

COMMODITIES: WTI Touches 3-Week Low

• WTI Crude up $0.25 or +0.26% at $97.69
• Natural Gas up $0.08 or +1.33% at $6.155
• Gold spot up $1.26 or +0.07% at $1925.42
• Copper down $5.35 or -1.13% at $472.55
• Silver down $0.09 or -0.36% at $24.3348
• Platinum down $7.12 or -0.74% at $951.25