Morning Call For Wednesday, March 21

Overnight Markets and News

Jun E-mini S&Ps (ESM18 -0.01%) this morning are down -0.01% and European stocks are down -0.04% as the markets await the FOMC’s first policy decision with Jerome Powell as Fed Chair. Losses were limited due to strength in energy stocks with May WTI crude oil (CLK18 +0.96%) up +0.93% at a 3-week high after API data late Tuesday showed U.S. crude inventories fell -2.74 million bbl last week. Crude prices also rallied after President Trump hinted at a withdrawal from a deal curbing Iran’s nuclear program, which raises the risk of Iran’s crude exports being stopped by sanctions. GBP/USD rallied +0.41% and the 10-year Gilt yield climbed to a 2-week high of 1.54% after the UK Jan unemployment rate unexpectedly fell to a 42-1/2 year low and after average weekly earnings rose at the fastest pace in over 2-years, which may prompt a hawkish response from the BOE when it meets tomorrow. Asian stocks settled mixed: Japan closed for holiday, Hong Kong -0.43%, China -0.29%, Taiwan unch, Australia +0.23%, Singapore -0.06%, South Korea -0.06%, India +0.42%. China’s Shanghai Composite fell back from a 1-week high and closed lower as insurance stocks sold-off after a report from S&P Global Ratings said increased regulatory controls could cut the insurance sector’s pace of growth in half over the next two years.

The dollar index (DXY00 -0.22%) is down -0.25%. EUR/USD (^EURUSD +0.25%) is up +0.29% after the council of German economic advisers raised their German 2018 GDP estimate. USD/JPY (^USDJPY -0.16%) is down -0.17%.

Jun 10-year T-note prices (ZNM18 -0-045) are down -3.5 ticks.

The German government’s council of economic advisers raised the German 2018 GDP forecast to 2.3% from a 2.2% estimate in Nov and said the ECB’s exit from “extremely expansive” monetary policy is “overdue” in view of improved economic outlook and higher inflation.

The UK ILO unemployment rate unexpectedly fell -0.1 to 4.3% for the 3-monhts through Jan, stronger than expectations of no change at 4.4% and matched a 42-1/2 year low.

UK Jan average weekly earnings rose +2.8% 3-mo avg y/y, stronger than expectations of +2.6% 3-mo avg y/y and the fastest pace of increase in 2-1/3 years.