Daily Comments

Asian markets settled mixed. The Nikkei 225 was closed for a holiday. The Shanghai Composite slipped, losing -0.27%. The German government’s council of economic advisers raised their 2018 forecast for GDP to +2.3% from +2.2%. They added that a move by the ECB away from its current accommodative monetary policy was “overdue.” European equities finished mostly lower. The DAX was up +0.01%. Yields on 10-yr. Bunds rose to 0.594%. The Q4 Current Account Balance was close to expectations at -$128.2B. February Existing Home Sales were strong at 5.540M. Last night the API reported a surprise draw in crude inventories of -2.7M barrels. This morning the EIA was almost identical at -2.6M barrels. As expected, the Fed raised rates to 1.625%.. Yields on 10-Year Notes were flat at 2.885%. The US$ Index weakened. April gold was up +0.7% to $1321.50. May crude jumped +2.6% to $65.17. After a shaky start, equities rallied, led by the small-cap Russell 2000, but enthusiasm moderated heading into the rate announcement with sideways trading. After the announcement, markets swung wildly in both directions before settling mostly lower.

Speaking at China’s National People’s Congress, Premier Li Keqiang said China will support expanding health coverage through fiscal policies. Asian markets were mixed. The Nikkei 225 fell -0.47% while the Shanghai Composite reversed early losses to close up +0.34%. German February PPI and March ZEW expectations of economic growth were both less than anticipated. On a weaker euro and pound, European equities finished stronger. The DAX rose +0.74%. Yields on 10-yr. Bunds were higher, rising to 0.580%. There were no major economic reports scheduled today, but the Federal Open Market Committee began a two-day meeting to set rates and policy. Yields on 10-Year Notes rose to 2.887% and the US$ Index was higher. April gold dropped -0.5% to $1311.90. April crude added +2.3% to $63.54. Markets were relatively quiet after yesterday’s downturn. A lull in data and news will end tomorrow as the Fed makes its rate announcement. Volume was light, even as volatility stays somewhat elevated. While solidly on the plus side most of the day, markets finished only modestly higher.

China February new home prices rose in 44 of the 70 cities tracked, down from 52 in January. Asian markets were mixed after news broke that Apple was designing and manufacturing its own device displays. The Nikkei 225 fell -0.90% while the Shanghai Composite added +0.30%. Eurozone January construction output fell the most in a year. European equities slumped when U.S. markets began trading. The DAX fell -1.39%. Yields on 10-yr. Bunds were mostly flat, closing at 0.568%. There were no major economic reports scheduled today and none are scheduled for tomorrow, although the Fed will begin it’s FOMC meeting. Yields on 10-Year Notes edged up slightly to 2.857%. The US$ Index traded lower. April gold added +0.4% to $1317.80. April crude fell back -0.5% to $62.06. A weak open quickly became a rout, and markets cascaded lower throughout the day. Volatility leapt higher and volume was heavy. By midday, markets were testing support levels (2700 in the S&P 500, and 6840 in the Nasdaq 100.) When support held, there was a late bounce, but markets still closed broadly lower.