Tech Sector Bears Drive Markets Down

Wall Street was mixed yesterday with the NASDAQ underperforming, falling -2.46% with declines accelerating into the close. The tech spillover left the S&P 500 -0.7% in the red, while the Dow inched up 0.09%.

Treasuries extended declines, led by the long end in a bear steepener. It was a third straight day of losses for the 10- and 30-year maturities, with rates at their highest in a year. The 10-year rose to 1.36% and the 30-year to 2.17%. The 2-year was only fractionally cheaper to 0.120% ahead of today’s $60 bln auction that kicks off $183 bln in offerings.

Key Market Drivers:

  • U.S. calendar highlighted by Fed Powell’s semi-annual Congressional testimony
  • Canada calendar includes a speech by BoC Governor Macklem
  • Dollar up amid precipitous drop in cryptocurrencies, alongside commodity drop
  • Bitcoin down 22% at today’s lows from the record high seen earlier in the week
  • EGBs have sold off, Treasuries outperformed ahead of Powell, stocks broadly lower
  • Eurozone Jan HICP inflation confirmed at 0.9%, core at 1.4%, as expected
  • UK labour data showed a drop in jobless claims, a sharp rise in average earnings

Fed Chair Powell’s semi-annual Monetary Policy Report to Congress highlights today. This kicks off 2-days of testimony, beginning with the Senate Banking Committee. We don’t expect anything new as he will stress the Fed is committed to maintaining its ultra-accommodative policy stance and will not be hiking rates or reducing QE buying any time for the foreseeable future. As for data, February consumer confidence is expected to improve to 90.0 from 89.3.

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The December S&P/Case-Shiller home price index should rise to 239.3 from 238.5, while the December FHFA home price index is penciled in at 311.7 from 310.1. The February Richmond Fed index should edge up to 15 from 14. Weekly chain store sales are also due. The Treasury will auction $60.0 bln of 2-year notes.

The earnings calendar features Home Depot, Medtronic, Square, Intuit, Bank of Nova Scotia, Bank of Montreal, Thomson Reuters, CoStar Group, Alcon, Verisk, Pioneer Natural Resources, Royal Caribbean, and Heico.

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