U.S.: Markets sluggish this morning. Kansas City Fed president Thomas Hoenig, an outspoken critic of the Fed, warned yesterday that the central bank’s easy money policy may lead to another financial crisis through increased speculation. The comments came on the same day as the release of President Obama’s optimistic economic report to Congress, which plans on a doubling exports by 2014. Treasury Secretary Timothy Geithner also complimented the current recovery in a separate statement. Mortgage applications rose 13.2% last week after slipping 9.5% the week prior, the lowest since November 2008. Existing home sales grew in January by 2.7% MoM v -1.1%E. The unexpected increase occurred with the lowest median price in almost nine years as the number of foreclosures and short sales reached a twelve month high. Similarly, consensus estimates expect new home sales to decline 7.3% MoM. Look for that release later this morning as an additional metric for the slow recovery in housing.
Europe: Markets worldwide continue to fall as violence in Libya persists and oil continues to climb. The SOVX WE continues to widen, pushing out to 189 while EURIBOR-OIS tightened to 24.3bp from 30.3bp last week. Euro zone consumer confidence was -10 in February, matching market estimates and increasing from -11.2 in January, while the business climate indicator missed targets of 1.61 with a release of 1.45. Nevertheless, Euro zone economic confidence grew to 107.8 in February v 106.5 last month. This point marks a three and a half year high. German GDP rose 0.4% QoQ in line with market expectations.
Asia: Australia’s leading index Hong Kong releases its trade balance today. Market consensus expects a 14.4% increase in exports YoY and a 16.1% increase in imports, yielding a negative trade balance. Today will also put Japan’s economic downturn in the context of inflation with the release of Japanese CPI estimated at -0.1% YoY and Tokyo CPI estimated at -0.3% YoY.
From Brian Yelvington of Knight Capital