Open trading account 
The dollar index rose yesterday ahead of the Trump speech to Congress and is hanging on to gains
after hitting a 7-week high, despite the speech being “long on promises but short on detail,” as Reuters puts it.
The FT reports the Fed trumped Trump--the bigger news was NY Fed Pres Dudley saying we don’t need to wait for fiscal plans—the case for the March hike is “more compelling.”
The FT writes “The probability of a rate increase in March climbed to 74 per cent on Tuesday afternoon, shortly after Mr Dudley’s remarks, according to Bloomberg data on federal funds futures. The odds increased further to as high as 80 per cent a little before 8pm in New York. The chances were 50:50 on Monday, and 36 per cent last Tuesday.” Trump stuck to the prepared speech and was somewhat more conventionally presidential, although he shocked the FT by suggesting to hell with the WTO if it rules against the US. The only two specifics were letting Congress fix Obamacare and a renewed commitment to $1 trillion in infrastructure spending, a campaign promise.
Markets should have been discouraged by the lack of progress on tax reform. Trump said “My economic team is developing historic tax reform that will reduce the tax rate on our companies so they can compete and thrive anywhere and with anyone. At the same time, we will provide massive tax relief for the middle class.” And that’s all, folks. But the CNN poll after the speech shows a 57% approval rating.
after hitting a 7-week high, despite the speech being “long on promises but short on detail,” as Reuters puts it.
The FT reports the Fed trumped Trump--the bigger news was NY Fed Pres Dudley saying we don’t need to wait for fiscal plans—the case for the March hike is “more compelling.”
The FT writes “The probability of a rate increase in March climbed to 74 per cent on Tuesday afternoon, shortly after Mr Dudley’s remarks, according to Bloomberg data on federal funds futures. The odds increased further to as high as 80 per cent a little before 8pm in New York. The chances were 50:50 on Monday, and 36 per cent last Tuesday.” Trump stuck to the prepared speech and was somewhat more conventionally presidential, although he shocked the FT by suggesting to hell with the WTO if it rules against the US. The only two specifics were letting Congress fix Obamacare and a renewed commitment to $1 trillion in infrastructure spending, a campaign promise.
Markets should have been discouraged by the lack of progress on tax reform. Trump said “My economic team is developing historic tax reform that will reduce the tax rate on our companies so they can compete and thrive anywhere and with anyone. At the same time, we will provide massive tax relief for the middle class.” And that’s all, folks. But the CNN poll after the speech shows a 57% approval rating.
- In Australia, the AUD spiked upward on the GDP release but then gave most of it back. Q4 delivered 1.1%, reversing the terrible Q3 (-0.5%) for a full year 2.4%, avoiding a second quarter of contraction and thus recession. Strong household consumption gets the credit, although wage growth remains weak, plus exports. Critics say consumers drawing down savings to consumer is a danger sign.
- In Japan, a MoF Survey finds Q4 capital spending up 3.8% y/y (and 3.5% excluding software). Sales and profits are high. The Feb manufacturing final index is 53.3 from 53.5 in the flash, hanging on to its status as the highest in 35 months, from 52.7 in Jan.
- In China, the Feb Caixin manufacturing PMI beat the forecast of 50.8 with 51.7 (after 51.0 in Jan), led by rising export orders. The official manufacturing PMI was 51.6, better than 51.1 forecast, and services were 54.2 (vs. 54.6 in Jan).
- In the UK, BRC shop prices fell 1.0% in Feb but less than the Jan drop of 1.7%. Wait a minute—the UK is getting inflation from the weaker pound, isn’t it? The UK released a bunch of things. Nationwide house prices for Feb are up 0.6% m/m and 4.5% y/y, more than forecasts. So much for London sellers desperately slashing prices,” as Bloomberg has it. Consumer credit also beat forecasts at £1.416 billion from £0.984 B and £1.2 B forecast. Mortgage lending and approvals are higher. But the biggie, the Markit/CIP manufacturing PMI for Feb fell to 54.6 from 55.9 and under the forecast of 55.6. This is what drove sterling down, despite the other data being pretty good.
