US stocks declined with small caps and treasuries hit after hot PPI data - Newsquawk Asia-Pac Market Open

US stocks were lower and there was notable weakness in Treasuries after hot PPI data further stoked reflationary concerns following the CPI report earlier this week. The pressure in stocks was greatest in the rate-sensitive Russell 2000 small cap index and the amount of Fed easing priced across 2024 dipped to 75bps from 80bps before the data, while the miss on Retail Sales added to the headwinds.
USD strengthened and the DXY climbed above the 103.00 level following recent data releases including hotter-than-expected PPI data and below-consensus jobless claims data, while Retail Sales disappointed.
Looking ahead, highlights include Chinese House Prices, PBoC MLF Rate, Japanese Rengo Wage Hike Announcement.

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Highlights include Chinese House Prices, PBoC MLF Rate, Japanese Rengo Wage Hike Announcement.
Click here for the Newsquawk Week Ahead.

US TRADE

US stocks were lower and there was notable weakness in Treasuries after hot PPI data further stoked reflationary concerns following the CPI report earlier this week. The pressure in stocks was greatest in the rate-sensitive Russell 2000 small cap index and the amount of Fed easing priced across 2024 dipped to 75bps from 80bps before the data, while the miss on Retail Sales added to the headwinds.
SPX -0.29% at 5,150, NDX -0.30% at 18,014, DJIA -0.35% at 38,905, RUT -1.96% at 2,031.
Click here for a detailed summary.

NOTABLE HEADLINES

US President Biden said US Steel (X) should remain domestically owned and operated.

DATA RECAP

US Retail Sales MM (Feb) 0.6% vs. Exp. 0.8% (Prev. -0.8%, Rev. -1.1%)
US PPI Final Demand MM (Feb) 0.6% vs. Exp. 0.3% (Prev. 0.3%)
US PPI Final Demand YY (Feb) 1.6% vs. Exp. 1.1% (Prev. 0.9%, Rev. 1.0%)
US PPI exFood/Energy MM (Feb) 0.3% vs. Exp. 0.2% (Prev. 0.5%)
US PPI exFood/Energy YY (Feb) 2.0% vs. Exp. 1.9% (Prev. 2.0%)
US Initial Jobless Claims 209k vs. Exp. 218k (Prev. 217k, Rev. 210k)
US Continued Jobless Claims 1.81M vs. Exp. 1.90M (Prev. 1.91M, Rev. 1.79M)

USD strengthened and the DXY climbed above the 103.00 level following recent data releases including hotter-than-expected PPI data and below-consensus jobless claims data, while Retail Sales disappointed.
EUR was pressured by the dollar strength and following the plethora of ECB rhetoric including dovish remarks from Stournaras who said they have to cut rates twice before the summer break and four cuts in 2024 seem reasonable, while he also stated that the ECB needs to begin cutting soon.
GBP softened amid weakness in cyclical counterparts and a firmer dollar, with very little fresh news for the pound.
JPY failed to sustain the early gains seen from a press report that the BoJ is arranging to end NIRP at next week's meeting and USD/JPY extended above the 148.00 level alongside the rise in US yields.

Treasuries tumbled after hot PPI accentuated the inflationary concerns from the recent CPI report and despite weak retail sales.

Oil prices extended on their rally after breaking out to multi-month highs and were unfazed by a firmer dollar and soft retail sales.
IEA OMR raises 2024 oil demand growth forecast by 110k BPD to 1.3mln BPD and if OPEC+ voluntary cuts remain in place through 2024, the market is seen in a slight deficit rather than a surplus.
Russian Energy Ministry said it expects Russian crude oil exports to rise due to unplanned maintenance at refineries, according to Interfax.
Indian banks have halted imports of silver following import duty differentials triggering private traders to purchase more, according to Reuters citing dealers and officials.

MIDDLE EAST

Israeli PM Netanyahu said he will continue to resist pressure and that they will enter Rafah, complete the elimination of the remaining Hamas battalions and achieve victory, according to Sky News Arabia.
US Majority Leader Schumer called on Israel to hold elections to appoint a new government to resolve the Hamas threat.

OTHER

EU Foreign Policy chief Borrell said many analysts expect a major Russian offensive this summer.
Japan's Ministry of Defence doubled joint research projects with the private sector and is working with partners such as Hitachi (6501 JT) and Mitsubishi Electric (6503 JT) to hone tech such as drones and AI, according to Nikkei.

NOTABLE HEADLINES

China’s state planner issued draft rules to support high-quality firms to take on medium and long-term foreign debt.
China reportedly probed exposure of Hong Kong units of banks and insurers to local government debt, according to Reuters sources.
Chinese Foreign Ministry said Foreign Minister Wang Yi will visit Australia and New Zealand from March 17th-21st. It was separately reported that China's Commerce Ministry said the final ruling on the review into Australian wine tariffs will be made in accordance with the investigation procedures.
BoJ is reportedly arranging to end NIRP at the March gathering with the final decision to be made after confirming the results of the first round of responses, which the federation will announce this Friday, according to JiJi.

NOTABLE HEADLINES

ECB Chief Economist Lane said the ECB has a bit more confidence that they are heading towards the inflation goal and more data will help gain more confidence. Lane said it is better not to analyse whether it is April or June when it comes to lowering rates and the ECB will know a lot more by June, while he added they must avoid giving calendar guidance, have to go decision by decision and shouldn't look beyond the next meeting or two.
ECB's de Guindos sees Europe's economy picking up in H2 2024 and said they will have a sufficient level of information in June to make decisions on monetary policy.
ECB's Knot said he expects the first rate cut in June and further cuts this year most likely in September and December. Knot added that decisions in September and December would be helped by new projections and data, while interim meetings would also be available for rate cuts if incoming data tells them they should do more.
ECB's Schnabel said changes to their operational framework do not have any implications for their monetary policy stance, neither for interest rate policy nor for monetary policy bond portfolios which they expect to continue to be run off.
ECB's Stournaras said they have to cut rates twice before to the summer break and that four cuts in 2024 seem reasonable, while he added that they need to begin cutting soon and policy must not become too restrictive, according to Bloomberg.