Equities:
The core US CPI was up 0.1% in February, which fall short of the consensus of 0.2%. The US equities advance upon the continuation in the rotation into value and cyclical stocks while Tech shares lagged, which is a typical reflation trade (link to reflation trade article). The Dow Jones Industrial Average (US30) climbed 1.46% to a record, closing above 32,000 points. The S&P (US500) rose 0.6%, with the financial and material sector leading the gains. The Nasdaq Composite slipped 0.04% after Tuesday’s recovery.
According to the portfolio strategist at New York Life expectations, Lauren Good suggested that lower bond prices are in line with economic growth expectations. The environment still favors cyclical assets and “supports equities over bonds, and a weaker U.S. dollar,” she said.
Bonds & Yields:
Treasury yields on Wednesday fell after a government auction. The US 10-year yields fell towards 1.5% and the US 2-year yields fell 1 point to near 0.155%.
Forex:
The US dollar weakened against major currencies on Wednesday. The Euro rose from lows around $1.869 to highs near $1.1930. The Australian dollar rose from lows around $0.7669 to highs near $0.7745. The Japanese yen was higher against the dollar from highs near 108.92 yen per dollar to lows near 108.34 yen per dollar.
Commodities:
Global oil prices were higher on Wednesday, brent rose 0.95% to $68.16 per barrel. WTI crude rose 1% to $64.65 per barrel.
Metals:
Spot gold (XAUUSD) was up small to near $1724 an ounce. Iron ore rose by $1 a tonne small to $164.7 a tonne.
Key events to watch this week:
– ECB monetary policy meeting (Thursday)
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