Futures Rise; Europe, Gold Hit All Time High; Yen Surges

Ahead of Powell’s second day of testimony to lawmakers, US equity futures traded near session highs reversing earlier losses recorded during Asia session, when Japan’s Nikkei fell from all-time high on mounting expectations for a BoJ rate hike. As of 7:50am, S&P futures traded up 0.2% while Nasdaq futures rose 0.4%, while Europe’s Stoxx 600 index rose 0.4% to touch a new record. On Wednesday Powell reiterated that the Fed is in no rush to cut interest rates but that it will likely be appropriate to begin lowering borrowing costs “at some point this year” which of course is not news but the market once again pretended to act surprised. The comment spurred a slide in yields and a jump in gold to a fresh record high during Asian trading hours. The Japanese yen was on course for its best day this year, rising 1% versus the greenback as speculation surged that the Bank of Japan will hike rates in March. Not only did the January wage data top expectations, but Japan’s biggest union federation has also demanded its biggest pay hike since 1993. The Bloomberg Dollar Spot Index falls 0.2%. The euro was little changed ahead of the ECB decision. Treasuries are steady, with US 10-year yields at 4.10%. Oil prices declined, with WTI falling 0.7% to trade near $78.60. Spot gold rises 0.4%, having hit another record high in Asian trading hours. Bitcoin traded around $67,000 just shy of record highs.

In premarket trading, chipmakers’ shares advanced led by Micron Technology Inc. which surged more than 3% after receiving an upgrade from Stifel. Here are some other notable premarket movers:

  • ADT (ADT) falls 9% after an offering of 65m shares by a holder priced at $6.50 apiece, representing a ~13% discount to last close.
  • Avangrid (AGR) gains 7% after its owner, Spanish utility Iberdrola, offered about $2.5 billion to buy all the shares it doesn’t already own in the US subsidiary.
  • Bilibili (BILI) drops 7% after the Chinese video-streaming platform reported fourth-quarter average daily active users that fell short of Wall Street’s expectations.
  • Eli Lilly (LLY) slips less than 1% after Danish rival Novo Nordisk presented data showing its weight-loss drug amycretin helped patients in an early-stage clinical trial shed 13% of their weight in 12 weeks.
  • Emergent Bio (EBS) sinks 16% after the company reported adjusted losses for the fourth quarter that were wider than analysts expected.
  • Full Truck Alliance (YMM) ADRs gain 4% after the freight-dispatch platform reported fourth-quarter net revenue that beat estimates.
  • Honest Co. (HNST) soars 26% after the personal-care company reported fourth-quarter revenue and net income that topped consensus estimates.
  • Micron Technology (MU) rises 3% after Stifel raised its rating to buy, saying that average analyst estimates for 2025 are “wrong and too low” for the chipmaker.
  • New York Community Bancorp (NYCB) falls 3% after the commercial real estate lender issued a statement to clarify and update certain details a day after it received an equity investment of more than $1 billion.
  • OneSpan (OSPN) soars 29% after the cybersecurity firm posted beats for fourth-quarter profit and sales.
  • Victoria’s Secret (VSCO) sinks 28% after the beleaguered lingerie maker’s full-year sales guidance fell short of analysts’ expectations.
  • Yext Inc. (YEXT) jumps 17% after the infrastructure software company gave an outlook for adjusted full-year earnings that is ahead of expectations.

The ECB is set to keep borrowing costs steady for a fourth meeting on Thursday, with analysts unanimously predict the deposit rate will be held at a record 4%. Like their US counterparts, ECB chief Christine Lagarde is in no hurry to begin loosening monetary policy. Traders are bracing for the likelihood of the first quarter-point rate cut to be delivered either in June or July, while also expecting a total of at least three such reductions this year.

Michael Metcalfe, head of global macro strategy at State Street Global Markets, said equity markets had reacted calmly so far this year to the paring of rate-cut bets, with just three reductions now expected — in line with the Fed’s own projection. But he said traders will be looking to see if the Fed points to even fewer cuts. “Markets could be in a bit of a holding pattern because they’ve reached the point now where they’re in line with the Fed,” Metcalfe said, adding traders had “put the ball back into the Fed’s court.”

Also overnight, the yen rose as much as 1% after accelerated wage growth and remarks from a BOJ board member. Tokyo’s Nikkei 225 index dropped, while the two-year government note yield climbed to the highest level since 2011.
The moves spark concern that higher rates at home will lure back Japanese money that’s currently parked in overseas markets. “Japanese demand for foreign assets and for Treasuries in particular has held solid, but this cannot be taken for granted once Japanese yields get to potentially more attractive levels,” State Street’s Metcalfe said.

Looking at today's main US event, Fed Chair Powell will testify before the Senate Banking Committee on Thursday, where he reiterated the central bank is in no rush to cut interest rates, while adding that it will likely be appropriate to begin lower borrowing costs “at some point this year.” Powell also signaled officials would scale back plans to make banks hold more capital — a move that appeared to catch even seasoned industry lobbyists off-guard. That was enough to spur the biggest two-day rally in Treasuries since early February, keeping benchmark 10-year yields near a one-month low set on Wednesday. Powell’s testimony, due at 10 a.m. New York time, will come after weekly labor data that’s forecast to show initial jobless claims picked up slightly from the previous period.

US weekly employment benefits data are also due, and will set the stage for Friday’s monthly non-farm payrolls data.

In politics, Donald Trump challenged President Joe Biden to a debate after Nikki Haley dropped out of the Republican presidential race.

European stocks pared opening declines to trade higher on the day, with the benchmark Stoxx 600 index rising above 500 points for the first time ever, as large caps extend rally. The index’s rally to a record high has been fueled by optimism around global economic growth and easing monetary policy. Tech as well as auto stocks have led gains this year, while investors’ favorites Novo Nordisk, ASML and SAP all made record highs. Stoxx 600 up 0.3% at 499.93 points. Here are the most notable market movers:

  • Novo Nordisk shares surge as much as 5.8% after data showed the weight-loss drug amycretin helped patients in an early-stage clinical trial shed 13% of their weight in 12 weeks.
  • Anglo American shares gain as much as 3.5% after Morgan Stanley upgrades to overweight on an improving investment case.
  • Virgin Money shares surge as much as 37% after Nationwide Building Society offered to buy the company for 220p/share.
  • Bachem shares jump as much as 16% after the Swiss biochemical manufacturer reported better-than-expected 2023 results.
  • Rentokil shares soar as much as 20% after the UK-based pest controller reported full-year results and a plan to recover organic growth in the US.
  • ITV shares jump as much as 7.6% after the British broadcaster gave a stronger-than-expected advertising revenue outlook and announced a new cost savings program that will bring £50m benefit a year.
  • Teleperformance shares tumble 18% to the lowest since Dec. 2016, after the French call center operator’s full-year results leave analysts feeling “deflated.”
  • Hugo Boss shares drop as much as 20% after the German retailer’s outlook fell short of analysts’ expectations. RBC says the miss is likely due to softer consumer sentiment.
  • Entain shares slip as much as 5.8% after the gambling group flagged a potential £40m hit to 2024 Ebitda from regulatory changes in the UK and the Netherlands.
  • Lufthansa shares slip as much as 1.8% after the German airline group said it expected flat Ebit in 2024, impacted by labor strikes. Morgan Stanley notes that commentary around demand is positive.
  • Ferragamo shares drop as much 7.7% after the Italian fashion group reported mixed full-year results that suggested the company’s turnaround story still has a way to run.
  • Nordnet shares slide as much as 5.8% after SEB Equities cuts to hold, saying the wealth management firm is too reliant on a return to historical levels of retail trading customers.

In FX, the Bloomberg Dollar Spot fell 0.2%, declining for a fifth consecutive day, setting the currency up for its longest losing streak since October. The euro is little changed ahead of the European Central Bank decision.  The Japanese yen is on course for its best day this year, rising 1% versus the greenback as speculation surged that the Bank of Japan will move in March to raise interest rates. Not only did the January wage data top expectations, but Japan’s biggest union federation has also demanded its biggest pay hike since 1993

In rates, treasuries are steady, with US 10-year yields at 4.10% trailing bunds by around 1.5bp in the sector while gilts lag. US Treasury yields are richer by up to 1bp across long-end of the curve which outperforms slightly on the day. Gilts are underperforming, led by the short-end as UK business say they expect to face stubbornly high wage growth.  Bunds outperform ahead of ECB rate decision at 8:15am New York time. JGBs extended recent declines on heaviest futures volumes of the year so far as conviction grows that the Bank of Japan will start raising interest rates in March.

In commodities, oil prices decline, with WTI falling 0.7% to trade near $78.60 after West Texas Intermediate jumped 1.3% Wednesday amid further tensions in the Middle East, including the first confirmed deaths of commercial crew after Houthi militants began attacks in the region. Spot gold rose 0.4% climbing to a peak of $2,161.48 an ounce, having hit another record high in Asian trading hours.

Bitcoin rose, but held off record peaks.

Looking at today's calendar, US economic data calendar includes February Challenger job cuts (7:30am), January trade balance, 4Q final nonfarm productivity, initial jobless claims (8:30am), 4Q household change in net worth (12pm) and January consumer credit (3pm). Fed speakers scheduled include Powell’s testimony before the Senate Banking Committee (10am) and Mester (11:30am, 1:15pm)


Market Snapshot

  • S&P 500 futures little changed at 5,111.00
  • STOXX Europe 600 little changed at 498.54
  • MXAP up 0.3% to 175.99
  • MXAPJ up 0.3% to 531.57
  • Nikkei down 1.2% to 39,598.71
  • Topix down 0.4% to 2,718.54
  • Hang Seng Index down 1.3% to 16,229.78
  • Shanghai Composite down 0.4% to 3,027.40
  • Sensex little changed at 74,080.55
  • Australia S&P/ASX 200 up 0.4% to 7,763.71
  • Kospi up 0.2% to 2,647.62
  • Brent Futures down 0.3% to $82.72/bbl
  • Gold spot up 0.4% to $2,156.24
  • U.S. Dollar Index down 0.16% to 103.20
  • German 10Y yield little changed at 2.34%
  • Euro little changed at $1.0899


Top Overnight News

  • The BOJ's governor and one of its board members said on Thursday the economy was moving towards the central bank's 2% inflation target, in comments that heightened market expectations of an imminent end to negative interest rates. RTRS
  • Japan's largest industrial labor group said on Thursday that 25 of its member unions have so far had their wage demands met in full from management, agreeing to raise full-time workers' pay 6.7% during annual wage talks that end next week. The pay hike was the biggest since the UA Zensen, an umbrella group that represents 2,237 unions, was established in 2012, likely adding to the momentum of the ongoing negotiations. Strong wage growth is expected to pave the way for the central bank to normalize monetary policy. RTRS
  • China’s import/exports for the Jan/Feb period exceed expectations – exports came in at +7.1% (vs. the Street +1.9%) while imports rose 3.5% (vs. the Street +2%). China’s FX reserves for Feb came in at $3.225T, a bit ahead of the Street’s $3.217T forecast. RTRS
  • China is scrutinizing regional banks’ bond trading over concern they are speculating, rather than lending to boost the economy, people familiar said. BBG
  • Tonight Biden will propose a dramatic expansion in the number of drugs Medicare can negotiate pricing on (from 20 under the current rules to 50) along with other measures aimed at curbing pharmaceutical costs for Americans. The Hill
  • Joe Biden’s top economic aide, Lael Brainard, successfully pressed to adjust a White House Treasury yield forecast in a way that resulted in a slightly rosier outlook in the president’s forthcoming budget plan, people familiar said. BBG
  • Robinhood is seeing as much as 25% of total trading volume coming outside of traditional market hours as investors take advantage of extended days on the retail-brokerage platform. Consumers have traded more than $10 billion in volume overnight since Robinhood launched its 24-hour, five-day-a-week trading capabilities last May — data the firm hasn’t previously announced. BBG
  • Apple has been asked by the EU to explain why it prevented Fortnite video-game maker Epic Games from launching its own online marketplace on iPhones and iPads in Europe and whether this breaches EU technology rules, antitrust regulators said. RTRS
  • Exxon Mobil said it filed a contract arbitration claim related to Hess Corp's, opens new tab proposed sale of its Guyana oil properties, and suggested it may counter Chevron Corp's pending deal for the assets. RTRS

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mixed as participants second-guessed central bank policies and digested Chinese trade data.
ASX 200 finished higher but with trade choppy after disappointing home loans and trade data from Australia. Nikkei 225 initially climbed to a fresh record high but then slumped amid increasing hawkish BoJ speculation. Hang Seng and Shanghai Comp. were subdued with heavy losses in WuXi Biologics and Wuxi Apptec after the US Senate's Homeland Security Committee voted to move forward with a bill that could restrict business with Chinese biotech companies, while the mainland was cautious despite the stronger-than-expected Chinese trade data, as the double-digit rise in exports had already been flagged by officials and with data likely to be influenced due to seasonality factors owing to the Lunar New Year holiday.

Top Asian news

  • Chinese Foreign Minister Wang Yi said China has maintained continuity and stability of its policy towards the US, while he added that only by respecting and recognising differences can exchanges continue. Wang said they have to point out that the US's wrong perception of China has continued and challenges facing the US are in itself not China, according to Reuters.
  • HKMA advised banks to take extra care when lending to property speculators, according to SCMP.
  • US Senate's Homeland Security Committee voted to move forward with a bill that could restrict business with Chinese biotech companies like BGI and WuXi AppTec (603259 CH) on national security grounds.
  • BoJ Board Member Nakagawa said Japan's economy making steady progress towards the achievement of the price target and given the risks and uncertainties, she would like to gather information without any pre-set idea and make the appropriate monetary policy decision. Nakagawa said if they judge that sustained achievement of price goal foreseen, they will decide whether or not to tweak YCC, risky asset buying and other policy means, while she added the main scenario is that expectations of rising wages will underpin consumer sentiment, but there is risk that real income will undershoot and weigh on demand, economy and prices.
  • BoJ Governor Ueda says fully possible to seek exit from stimulus while striving to achieve 2% target, says will mull adjusting easing if they can achieve price target and chance of reaching target is gradually rising. Will consider rolling back massive stimulus programme once positive cycle of wages and inflation is confirmed.
  • Japan's Rengo wage demand this year reportedly at 5.85% (4.49% in 2023), via Bloomberg.
  • Chinese regulators are scrutinizing regional banks’ bond buying amid concerns the banks are speculating on securities as opposed to lending to boost the economy, according to Bloomberg sources.

European bourses, Stoxx600 (+0.1%) began the session entirely in the red, though sentiment has since improved, with the Euro Stoxx 50 (+0..2%) modestly firmer, ahead of the ECB announcement today. European sectors are mixed; Healthcare is the clear outperformer, propped up by gains in Novo Nordisk (+5.1%), which is on its Capital Markets Day. Insurance is also firmer today, assisted by post-earning strength in Aviva. Autos is found at the foot of the pile, hampered by Continental (-4.1%). US Equity Futures (ES U/C, NQ +0.1%, RTY -0.1%) are tentative and trade on either side of the unchanged mark, with direction generally mirroring the price action seen in Europe.


Top European news

  • German Economic Institute DIW says GDP expected to contract by 0.1% in Q1 (vs -0.3% in Q4 2023); 2024 forecast cut to 0% (prev. +0.6%), 2025 forecast upgraded to +1.2% (prev. +1.0%).
  • BoE Monthly Decision Maker Panel - One-year ahead CPI inflation expectations declined further to 3.3% in February, down from 3.4% in January. Three-year ahead CPI inflation expectations fell to 2.8% in the three months to February, 0.1pp lower than reported in the three months to January. Expected year-ahead wage growth remained unchanged at 5.2% on a three-month-moving-average basis. Businesses expect their output price inflation to decline over the next year.
  • Britain's renewable scheme gets more than GBP 1bln from Governments upcoming auction.



  • DXY is on the backfoot following yesterday's selling pressure, with JPY strength possibly acting as a drag on the USD. There is not much in the way of support until 103, below which lies the Feb low at 102.90. NFP on Friday looms large.
  • EUR is steady vs. the USD and lingering around the 1.09 mark after matching yesterday's best at 1.0907. If the ECB comes in "hawkish", next upside target is via the Jan 24th peak at 1.0932.
  • JPY the clear outperformer following yesterday's hawkish source reporting, BoJ commentary today and details over Rengo wage demands. USD/JPY has declined from a session high of 149.39 to a trough of 147.82, which coincides with the 50DMA.
  • Antipodeans are both notably firmer vs. the USD. AUD potentially garnering support via Chinese trade metrics and rising iron ore prices. AUD/USD has eclipsed its 50DMA at 0.6585 with all eyes on a test of 0.66; not breached since Feb 2nd - 0.6610 was the high that day.
  • PBoC set USD/CNY mid-point at 7.1002 vs exp. 7.1898 (prev. 7.1016).


Fixed Income

  • USTs are incrementally firmer but steady overall at the low-end of slim 111-11 to 111-17+ bounds. Continued upside brings 111-20+, 7th Feb high into play. If the bearish action returns support resides at 111-01+, 110-23 & 110-21 from the last three sessions. Docket ahead features a number of US data points around the ECB and thereafter Fed's Powell & Mester. Just before Mester, the 3, 10, 30yr refunding announcement is due.
  • Bunds began the European session on a weaker footing, with hawkish impetus potentially taken from BoJ commentary and Rengo demands. Thereafter, soft German Industrial Orders and a significant upward revision seemingly pushed Bunds below the 133.00 handle to the current 132.93 trough. Following the strong French outing, Bunds lifted back above 133.00 to a peak at 133.29.
  • Gilt price action is in-fitting with peers as action settles somewhat post-budget, the Chancellor's media round added little this morning, though he did hint that income tax and national insurance could be combined as an alternative to abolishing NI. Gilts currently holds around 99.20.
  • Spain sells EUR 6.058bln vs exp. EUR 5.5-6.5bln 3.50% 2029, 0.50% 2031, 3.25% 2034 Bono & EUR 0.51bln 0.25-0.75bln 2.05% 2039 I/L
  • France sells EUR 12.997bln vs exp. EUR 11.5-13bln 3.50% 2033, 1.25% 2034, 1.25% 2038 and 3.25% 2045 OAT



  • Crude is softer on the session, failing to benefit from the weaker Dollar, and reports that ceasefire talks were unsuccessful have also failed to lift the complex; currently, Brent Apr is just under USD 82.50/bbl.
  • Precious metals vary with spot gold continuing to rise to fresh ATHs above USD 2,150/oz as the upward momentum holds, whilst a subdued Dollar and heightened geopolitics only provide tailwinds. Spot silver takes a breather after yesterday's gains; XAU posts an intraday range between USD 2,144.26-2,161.59/oz.
  • Base metals are firmer trade across the board with the complex seemingly seeing tailwinds from the constructive Chinese Trade data overnight; 3M LME copper reclaimed a USD 8,600/t handle.


Geopolitics: Middle East

  • US Central Command said an anti-ship ballistic missile was launched from Houthi-controlled areas in Yemen towards M/V True Confidence while transiting through the Gulf of Aden, while the multinational crew reported three fatalities, at least four injuries and significant damage to the ship, according to Reuters.
  • US military said it conducted self-defence strikes against two unmanned aerial vehicles in Yemen, according to Reuters.
  • Several people have died in an explosion at Iran's Bandar Abbas Refinery (320k BPD capacity), via IRNA
  • "Mediators tried to bridge the gap between Hamas and Israel, but their efforts were unsuccessful", according to Al Jazeera sources. "Israel rejected Hamas' request for a permanent ceasefire, the withdrawal of the army from the Gaza Strip and the unconditional return of displaced persons".
  • Hamas delegation has left Cairo, ceasefire negotiations to resume next week, according to Al-Qahera News citing an official source



  • Chinese Foreign Minister Wang said they resolutely oppose all acts of power and bullying, while it will vigorously safeguard sovereignty, security, and development of the country. Wang commented that maintaining and developing Sino-Russian relations is a strategic choice based on the fundamental interests of both nations and China is willing to work with Russia to foster new drivers of cooperation and consolidate friendship. Furthermore, he stated that Taiwan election results cannot change the historical trend that it will return to the 'motherland' and pro-Taiwan independence forces are the biggest factors undermining peace and stability in the Taiwan Strait.
  • North Korean leader Kim inspected military training and ordered an upgrading of war preparations, according to KCNA.


US Event Calendar

  • 07:30: Feb. Challenger Job Cuts YoY, prior -20.0%
  • 08:30: 4Q Unit Labor Costs, est. 0.7%, prior 0.5%
  • 08:30: 4Q Nonfarm Productivity, est. 3.1%, prior 3.2%
  • 08:30: March Initial Jobless Claims, est. 216,000, prior 215,000
  • 08:30: Feb. Continuing Claims, est. 1.88m, prior 1.91m
  • 08:30: Jan. Trade Balance, est. -$63.5b, prior -$62.2b
  • 12:00: 4Q US Household Change in Net Wor, prior -$1.31t
  • 15:00: Jan. Consumer Credit, est. $10b, prior $1.56b


Central Bank Speakers

  • 10:00: Fed Chair Powell Testifies Before Congress
  • 11:30: Fed’s Mester Gives Speech on Economic Outlook
  • 13:15: Fed’s Mester on CNBC

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