Daily Comments

China inflation data for January was up +1.7% y/y. Trade talks concluded with no breakthrough, but will resume next week in Washington. Asian markets were broadly lower. The Nikkei 225 fell -1.13% and the Shanghai Composite lost -1.37%. On trade hopes, European equities finished broadly higher. The DAX was up +1.83%. Yields on 10-yr. Bunds were unchanged at 0.103%. January Import Prices dropped -0.5% and Export Prices fell -0.6%, Industrial Production disappointed at down -0.6% and Capacity Utilization eased to 78.2%. February Empire State Manufacturing improved to 8.8 and preliminary Consumer Sentiment was a strong 95.5. Baker-Hughes reported that the U.S. oil rig count for 02/08 was up +3 at 857. Yields on 10-Year Notes rose to 2.663%. The US$ Index remained firm. April gold rose +0.8% to $1,322.10. March crude rose +2.2% to $55.59. Heading into the open, markets became more optimistic about progress on trade. Averages surged higher on heavy volume. At higher levels, markets traded sideways through most of the day. Volumes and volatility subsided as we approached the 3-day weekend. Markets closed strong to finish broadly higher.

China January exports leapt higher and imports fell less than expected. Amid ongoing trade talks, Asian markets were narrowly mixed. The Nikkei 225 eased by -0.02%. The Shanghai Composite was barely off as well, down -0.05%. British Prime Minister May lost a vote on Brexit today which undermines her position. European equities finished mostly lower. The Dax lost -0.69%. Yields on 10-yr. Bunds eased to 0.103%. Initial Claims for 02/08 rose to 239K. January PPI fell -0.1% (ex-food and energy +0.3%). December Retail Sales shocked markets, falling -1.2% (ex-autos -1.8%). November Business Inventories fell -0.1%, also below expectations. Yields on 10-Year Notes fell back to 2.655%. The US$ Index softened slightly. April gold fell -0.1% to $1,313.90. March crude rose +1.0% to $54.41. Overnight markets pointed to solid gains until the report on Retail Sales, then reversed to begin the day lower. Trade rumors pushed markets back and forth. Eventually, trade optimism overcame fears of an economic slowdown and markets moved into the green, led by technologies. As happened yesterday, sellers stepped in late in the session and markets closed narrowly mixed.

Asian markets, supported by a softer tone on trade from President Trump, closed mostly higher. The Nikkei 225 added another +1.34%. The Shanghai Composite jumped +1.84%. December eurozone industrial production for December was weaker than expected. European equities closed modestly higher. The Dax rose +0.37%. Yields on 10-yr. Bunds eased back to 0.122%. January CPI was below expectations at unchanged, but off an upward revision to December (ex-food and energy +0.2%). The December Treasury Budget was -$13.5B. Last night’s API report showed a decline in crude inventories of -1.0M barrels but this morning’s EIA report showed a strong build of +3.6M barrels. Yields on 10-Year Notes moved up to 2.704%. A firming US$ Index is near recent highs. April gold added less than +0.1% to $1,315.10. March crude rose again, closing up +1.5% to $53.90. Equities powered higher at the open but today the enthusiasm waned. Markets settled back into sideways action building slowly back toward the highs. Late in the session, sellers ate into most of the days gains before buyers stepped back in. At the close, markets were modestly higher.