The View From The Tower

Overnight Snapshot

 
The Day Ahead

0830hrs UK         UK Halifax House Price Index (est 0.08%mom/1.92%Q1 vs previous 0.4%/1.8%)
0930hrs UK         EU Sentix Consumer Confidence (est 20.96 vs previous 24.0)
1400hrs UK         EU The ECB’s Vitor Constancio presents the ECB 2017 Annual Report in Brussels
1745hrs UK         EU ECB’s Praet speaks in Frankfurt
1745hrs UK         UK British Prime Minister Theresa May meets Swedish PM Stefan Lofven in Stockholm
0001hrs UK         UK British Retail Consortium Shop Sales Monitor (est 0.47% vs previous 0.6%)
                               
The Day So Far….

STOCKS: US stocks dropped more than 2% on Friday, with the Dow falling more than 570 points to close 23932.76, the S&P500 losing 58.37 to 2604.47, and the Nasdaq100 dropping over 161 points to end the day at 6433.213 as once again the focus turned back to President Trump and his latest tariff threat on Chinese imports fueling concerns over a trade war. The current volatile markets (the VIX closed at 21.49) will be tested in the coming weeks as we enter earnings season with Q1 numbers kicking off later this week. Expectations are that tax cuts will help push first quarter earnings to show the biggest quarterly profit growth in seven years, but any disappointments will be key in such fragile markets. Major earnbings not with us until Thursday when we see the financials kick off with Blackrock, followed by JP Morgan, Citi and Wells Fargo on Friday.
Asia's major indices traded in mixed fashion as markets struggled to digest the evolving trade war situation alongside what appeared to be an Israeli based missile attack on Syria. - The Nikkei 225 stuck to a tight range and went into the lunch break 0.1% higher, consumer staples outperformed while energy names lagged following Friday's oil sell off. - Hong Kong's Hang Seng outperformed, gaining 1.4% as consumer orientated names led the way higher, while China's CSI 300 added 0.3%. - Australia's ASX 200 added 0.4%. - US index futures benefitted as US President Trump suggested that he believes China will come to the table re: trade, while reports suggested that North Korea is willing to discuss de-nuclearisation. The e-mini S&P added 18 points, as the mini-Dow added nearly 200 points.
 
US TSY/RECAP: Risk off was the theme on Friday as worries over escalated trade tensions and a soft NFP release boosted Tsys, which closed on highs. - Spec and fast-money selling was noted in intermediate paper after initial program and real-money buying in intermediates out to the long end after NFP. - Comments from US NEC Chair Kudlow pointing to a softer trade stance briefly helped Tsys back from highs. - Real-money & insurance portfolio purchasing of 10s & 30s helped the space move onto fresh highs, with block buys also aiding. - Comments from Fed Chair Powell were mostly in line with his initial address to congress.
 
OIL: Oil futures managed to claw back around $0.30 after Friday's risk-off/trade war inspired losses. - WTI last traded at $62.35, while Brent last trades at $67.40. - An increase in the weekly Baker Hughes rig count also placed additional pressure on the space on Friday, as did the fact that money managers slashed their bets on higher WTI prices according to the latest CoT report. - Although, weekend stories noting that China's oil product consumption through the end of February rose by 6.4% Y/Y helped stabilise crude.
 
GOLD: The yellow metal stuck to a tight range and was last trading virtually unchanged at $1333/oz. Holdings in bullion backed ETF’s have climbed to their highest since 2013. Silver, Platinum and Palladium all trading higher
 
FOREX: Markets struggled to digest a slew of headlines as China returned from an elongated weekend alongside what appeared to be an Israeli based missile attack on Syria. This came after President Trump had suggested that he believes China will come to the table re: trade, while reports suggested that North Korea is willing to discuss denuclearisation. The USD traded in mixed fashion against the majors, as the NZD outperformed on no news flow. - CAD shrugged off reports suggesting that there will be no NAFTA deal in principle announced at the upcoming summit of the Americas in Lima, after some limited CAD selling on the headline. - USDJPY hovered around 107.00 with circa USD 2.7bln worth of option expiries set to roll off at this level during the week. - On the option expiries front there is some EUR 1.1bln worth of 1.2150 EURUSD & EUR 1.14bln worth of  EURGBP 0.8650 set to roll off at today's NY cut (given they are not at market at the moment).

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