Daily Comments

Asian markets settled mostly lower. The Nikkei 225 lost -1.07% Markets in China resumed trading after the long holiday. To “normalize” with other world markets, the Shanghai Composite rose +2.17%. The German February IFO business climate survey fell more than expected to its weakest level in 5 months. European equities were mostly lower. The DAX slipped -0.07%. Yields on 10-yr. Bunds moderated to 0.706%. Initial Claims for the week of 02/16 dipped slightly to 222K. January Leading Indicators rose +1.0%. Last night, the API reported an unexpected drop in crude inventories of -907K barrels. This morning the official EIA report was for an even larger draw of -1.6M barrels. Yields on 10-Year Notes pulled back to 2.921% and the US$ Index was lower. April gold edged up +$0.60 to $1332.70. On the surprise draw in inventories, April crude bounced +1.8% to $62.77. Early on, equities shook off yesterday’s rate-hike fears and powered higher well into the afternoon. Once again, selling emerged to erase most of the day’s gains. Unlike yesterday, though, markets were able to hold on and close mostly higher.

Asian markets settled higher. The Nikkei 225 rose +0.21%. Markets in China will reopen tomorrow at the conclusion of the New Year’s holiday. Eurozone February Markit manufacturing and composite PMI both fell more than expected. European equities were mixed. The DAX fell -0.14%. Yields on 10-yr. Bunds eased slightly to 0.722%. The February PMI Flash readings were all above expectations, with Composite, Manufacturing, and Services all at 55.9. Jan. Existing Home Sales at 5.380M were below expectations. Minutes from the FOMC showed that the strengthening outlook has led to an increased likelihood of gradual rate hikes. In late afternoon trade, yields on 10-Year Notes shot up to 2.941%. The US$ Index was firmly higher. Before the minutes, April gold closed up $0.90 to $1332.10. April crude ended down -$0.11 at $61.68. Markets opened flat then moved broadly higher into the afternoon. Following the Fed minutes, averages extended gains further. When yields rose late, markets turned around and fell into the red. By the close, markets were broadly lower.

With both U.S. and China markets closed on Monday, the Nikkei 225 led the charge, rallying +1.97%. A portion of that gain faded today as the Nikkei 225 lost -1.01%. The Shanghai Composite and most other Asian markets remain closed for a holiday. The German February ZEW survey expectations of economic growth fell, but was still stronger than expected. Losses in European markets yesterday turned into gains today. Down -0.53% yesterday, the DAX closed up +0.83%. Yields on 10-yr. Bunds rose both Monday and Tuesday to 0.736%. There were no major economic reports on today’s calendar. Yields on 10-Year Notes were only modestly higher at 2.890%. The US$ Index had another strong day. April gold tumbled -1.9% to $1331.20. March crude closed and expired up +0.4% at $61.90. April crude (we rolled over today) closed +0.4% as well at $61.79. Early weakness in large-caps industrials, especially by Walmart, was offset in part by strength in large-cap technology. When even those issues lost momentum, markets turned south again. On relatively light volume, markets finished the day mostly lower.