Overview: Markets mostly positive this morning with the exception of Asia, as the announcement of tomorrow’s G7 meeting on the financial situation in Japan soothed investors.
U.S.: President Obama’s budget chief indicated that the administration has a willingness to compromise on Republican-favored budget cuts. The House passed a new stopgap bill on Tuesday that extends the current budget again, this time to April 8th. The bill should come to a vote in the Senate today. February CPI figures this morning at +0.4%E MoM v +0.4%MoM prior. A release higher than expectations would not be a surprise considering recent increases in food and energy prices (though most of yesterday’s PPI jump can be chalked up to weather). This morning will also see initial jobless claims at 388KE v 397K prior and continuing claims data at 3750KE v 3771K prior. The Philly Fed business outlook index is expected to fall from February’s lofty 35.9 to 28.8E. Industrial production at +0.6%E MoM v -0.1% MoM.
Europe: Spain sold €3.22B in 10Y at 5.162% v 5.200% prior with b/c at 1.81x v 1.54x prior and €911MM in 20Y at 5.875% v 5.488% prior with b/c at 2.1x v 2.05x prior. Although yields did not show an increase, they do remain elevated beyond a sustainable funding level for the country. Switzerland’s central bank kept its 3M LIBOR target rate at 25bp as the market anticipated, giving it more space to maneuver in the current financial turmoil. Libyan leader Qaddafi bombed a rebel headquarters in Benghazi, making a major blow against the anti-government forces. Today the U.N. will continue to debate its involvement in the conflict to save civilians.
Asia: Nuclear worries prevail in Japan and the Pacific. The G7 will meet tomorrow about Japan’s earthquake and yesterday’s record rise in the JPY. Discussions will likely revolve around JGB buying efforts and exchange rate intervention. BOJ typically targets the US/Europe overlap timeframe for intervention. The Reserve Bank of India raised rates for the eighth time this year, moving the repurchase rate up 25bp to 6.75% amid inflation concerns and a national plan to lower taxes and increase spending. Chinese inflation may come in around 5.5% MoM, according to a PBoC official, v February’s 4.9%. Hong Kong’s unemployment rate came in at 3.6% for February v 3.7%E.
From Brian Yelvington at Knight Capital