From Marc to Market:
Overview: The mostly consolidative week for the US dollar continues. Most for the G10 currencies are +/- about 0.25% today and only a slightly wider range for the week. The odds of a Fed rate cut in March is virtually unchanged on the week at around 75%. The JP Morgan Emerging Market Currency Index is practically flat on the day and week. The Russian ruble and Mexican peso lead today's advancers, while eastern and central European currencies are laggards. The Chinese yuan is flat despite moderating deflation and a larger trade surplus. Lending figures disappointed. The PBOC is likely to cut its one-year benchmark rate at the start of next week.
At US and UK strike on the Houthi in Yemen has helped lift oil and gold prices, but otherwise the impact on the markets is minimal. Outside of Japan and India, most of the large markets in Asia Pacific saw modest losses. Europe's Stoxx 600 is up about 0.8%, which, if sustained, would be the largest gain since mid-December. Perhaps European equities have been helped by a 4-5 bp decline in 10-year yields today. The 10-year US Treasury yield is up slightly near 3.98%. US index futures are a little softer. Gold set a new high for the week, as it draws near $2050. February WTI has reached a new high for the year, a little above $75 a barrel. ........China does not have a fixed schedule for many of its economic reports. Today, it updated inflation (really deflation), lending and trade figures. First, the deflation in CPI continued by at a slower rate. Consumer prices fell by 0.3% year-over-year in December. It as -0.5% in November and the median forecast was for -0.4%. Conventional wisdom attributes the deflation to weak demand, yet the deflation is primarily about food, where demand is not so elastic. Food prices are off 3.7% year-over-year, while non-food prices are up a 0.5%. CPI rose for the first time on a month-over-month basis since September. The core rate rose by 0.6% year-over-year for the third consecutive month. Producer price deflation slowed to -2.7% (-3.0% in November). Separately, aggregate lending figures slowed to CNY1.94 trillion from CNY2.45 trillion and was less than expected, despite a small improved in bank lending. Taken together, the inflation and lending figures add to expectation that the PBOC will cut the benchmark one-year Medium Term Lending facility rate Monday (from 2.50%). Lastly, China reported a larger-than-expected trade surplus of $75.3 bln, up from $68.4 bln in November. Exports rose by 2.3%, the second consecutive increase, while imports edged up 0.2% after falling by 0.6% previously. For the year as a whole, China's trade surplus narrowed for the first time since 2016. Exports were off 4.6% last year, though auto exports surged by almost 64% (and a little more than 4% domestically). Imports were off 5.5% last year....
....MUCH MORE
