Intraday Market Thoughts

What Will the Ides of March Bring?

by Adam Button
Feb 28, 2013 23:05

Twenty four hours away from the trigger of $85 bn in sequestered US spending and prolonged uncertainty in  Italy's elections are enough to cease markets from exhaling. Or, are they? The pound closed out February trading with a small bounce but it was the worst performer of the month. The US dollar was the top performer in the month as the economy continues to rebound after growth flatlined in Q4. March shall begin with a major round of Japanese data including employment, CPI and capital spending. In the  latest from the Premium Insights: 2 of 2 USDJPY hit all targets (92.30 & 92.70), 1 of 2 EURJPY hit all targets (119.40), 1 of 2 gold shorts hit all targets (1580).  12 trades are in progress and 2 trades await their fill in the latest Premium Insights.  

The final day of February trading included the second reading on Q4 US GDP. It confirmed that the economy paused at year end as the annualized pace of growth fell to 0.1%. That was better than the 0.1% contraction in the first reading but slower than the 0.5% expected.

The market shrugged off the indicator with Q4 now far in the rear-view mirror. Instead, better indications on jobs and manufacturing boosted the US dollar. Initial jobless claims improved to 344K compared to 360K and the Chicago PMI climbed to 56.8 compared to 54.0 expected.

As March begins, the start of the US sequester looms. The IMF warned it will downgrade US growth forecasts if the full-scope of the automatic spending cuts take place. Obama will hold a last-minute meeting on Friday but it's overwhelmingly likely that at least some curbs will implemented.

The initial effects on FX will be minimal but markets can be temperamental when it comes to politics and there is no telling when the mood will turn sour.

In the Asia-Pacific region, the calendar is busy once again on Friday. The main data points will be released at 2330 GMT, including Japanese CPI, employment and household spending. That's followed twenty minutes later by business capex.

The CPI numbers are the most likely to move the market but they are all important data points. February Tokyo inflation is expected to be down 0.6% y/y; accelerating from 0.5% deflation. More signs of falling prices give incoming BOJ Goveror Kuroda plenty of ammunition to launch more aggressive easing.

Act Exp Prev GMT
National CPI (FEB) (y/y)
-0.1% Feb 28 23:30
National CPI Ex Food, Energy (FEB) (y/y)
-0.6% Feb 28 23:30
National CPI Ex-Fresh Food (FEB) (y/y)
-0.2% -0.2% Feb 28 23:30
Tokyo CPI (FEB) (y/y)
-0.6% Feb 28 23:30
Tokyo CPI ex Food, Energy (FEB) (y/y)
-0.9% Feb 28 23:30
Tokyo CPI ex Fresh Food (FEB) (y/y)
-0.6% -0.5% Feb 28 23:30
National CPI (JAN) (y/y)
-0.1% Feb 28 23:30
National CPI Ex Food, Energy (JAN) (y/y)
-0.6% Feb 28 23:30
National CPI Ex-Fresh Food (JAN) (y/y)
-0.2% -0.2% Feb 28 23:30
Capital Spending (Q4)
-7.0% 2.2% Feb 28 23:50
GDP Annualized (Q4)
0.1% 0.5% 3.1% Feb 28 13:30
GDP Price Index (Q4)
0.9% 0.6% 2.7% Feb 28 13:30
Chicago PMI (FEB)
56.8 54.3 55.6 Feb 28 14:45
Markit Manufacturing PMI (FEB)
52.5 55.8 Mar 01 13:58
ISM Manufacturing PMI (FEB)
52.5 53.1 Mar 01 15:00
Nomura/ JMMA PMI Manufacturing (FEB)
48.5 47.7 Feb 27 23:13
PMI Manufacturing
48.5 47.7 Feb 27 23:15
Markit PMI Manufacturing (FEB)
47.5 47.8 Mar 01 8:43
Overall Household Spending (JAN) (y/y)
0.5% -0.7% Feb 28 23:30
Continuing Jobless Claims (FEB 17)
3.074M 3.160M 3.165M Feb 28 13:30
Initial Jobless Claims (FEB 24)
344K 360K 366K Feb 28 13:30

Latest IMTs