Markets Slightly Up Before The Bell

S&P 500 futures are up, but it was another rough day for the markets yesterday. The NASDAQ was hard hit, dropping over -3% to a low of 12,553 before paring the loss to close -2.1% lower at 12,723. We think that this could be a signal for a rotation out of tech stocks.

The jump in Treasury yields Thursday after Fed Chair Powell didn’t push back on the recent cheapening weighed heavily on equities. Our interpretation of this means that the Fed will continue boosting the markets and try to stock rising bond yields. The wi 10-year climbed 7 bps to hit 1.57%, just shy of the 1.61% intraday peak from last Thursday.

Key Market Events:

  • U.S. calendar has Feb employment report, Jan trade, and consumer credit
  • Canada calendar has Jan trade deficit – expected to narrow to -C$1.3 bln
  • Dollar ascent gathered pace, DXY index hitting 10-week highs
  • EGB yields have moved higher, while Treasuries stabilized, stocks struggled
  • German manufacturing orders stronger than expected at 1.4% m/m
  • BoJ’s Kuroda argues against the widening of bands around yield target
  • OPEC+ alliance agreed to maintain output restrictions for now
  • Fed’s Powell would be concerned by a disorderly move in yields

While the markets will be busy assessing yesterday’s moves, attention will turn to the February employment report. We expect nonfarm payrolls to rise 350k versus 49k in January.

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Hourly earnings are set to rise 0.1% from 0.2% previously, while the average workweek should dip slightly to 34.9 from 35.0 hours. The unemployment rate is forecast at an unchanged 6.3%. The January trade report has the deficit widening to $67.5 bln from $66.6 bln in December. January consumer credit is due late in the session, seen rising $10.0 bln from $9.7 bln previously. Fedspeak has Bostic on deck. The only larger-cap earning report comes from KB Financial.

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