US stocks gained at month-end after softer Employment Cost data, while focus shifts to the FOMC - Newsquawk Asia-Pac Market Open

US stocks rallied into month-end with the softening Q4 Employment Cost Index adding dovish fuel to the fire, while data out of Europe was two-way with soft French inflation and German retail sales counterbalanced by surprisingly strong Eurozone Q4 GDP to cap the bid on sovereign bonds.
USD was softer amid the risk-on mood but with downside in the DXY stemmed by support at the 102.00 level and with participants awaiting tomorrow's FOMC rate decision, while EUR/USD eked marginal gains amid the weaker greenback and mixed data releases from across the bloc.
Looking ahead, highlights include South Korean Trade Data, Regional PMIs, Chinese Caixin Manufacturing PMI & Supply from Australia.

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Highlights include New Zealand Employment Change and Labour Cost Index, South Korean Trade Data, Regional PMIs, Chinese Caixin Manufacturing PMI & Supply from Australia.

US TRADE

US stocks rallied into month-end with the softening Q4 Employment Cost Index adding dovish fuel to the fire, while data out of Europe was two-way with soft French inflation and German retail sales counterbalanced by surprisingly strong Eurozone Q4 GDP to cap the bid on sovereign bonds.
SPX +1.46% at 4,076, NDX +1.59% at 12,101, DJIA +1.09% at 34,086, RUT +2.45% at 1,931.
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NOTABLE HEADLINES

US President Biden announced funding for major transportation projects funded by the bipartisan infrastructure law which involved USD 1.2bln across 9 projects.
US President Biden’s administration plans to release the president’s budget on March 9th, according to Punchbowl sources.
White House said President Biden believes there should not be negotiations over raising the debt ceiling.
US House Speaker McCarthy said US President Biden should show that he is willing to negotiate on the debt ceiling and find a common ground at the meeting on Wednesday.

DATA RECAP

US Chicago PMI (Jan) 44.3 vs. Exp. 45.0 (Prev. 44.9, Rev. 45.1)
US Consumer Confidence (Jan) 107.1 vs. Exp. 109.0 (Prev. 108.3, Rev. 109.0)
US Employment Costs (Q4) 1.0% vs. Exp. 1.1% (Prev. 1.2%)
US CaseShiller 20 MM SA (Nov) -0.5% vs. Exp. -0.6% (Prev. -0.5%)
US CaseShiller 20 YY (Nov) 6.8% vs. Exp. 6.8% (Prev. 8.6%, Rev. 8.7%)

Treasuries bull steepened after lower employment costs growth in the US added to the tailwinds from the softer-than-expected French inflation data.

USD was softer amid the risk-on mood but with downside in the DXY stemmed by support at the 102.00 level and with participants awaiting tomorrow's FOMC rate decision.
EUR eked marginal gains amid the weaker greenback and mixed data releases from across the bloc.
GBP weakened despite the decline in the buck which saw GBP/USD briefly slip beneath the 1.2300 handle.
JPY marginally benefitted from the dollar's retreat and a slight narrowing of yield differentials.

Oil prices were firmer after having recovered earlier losses amid dollar weakness and Exxon jawboning.
US Energy Inventory Data (bbls): Crude +6.3mln (exp. +0.4mln), Cushing +2.7mln, Gasoline +2.7mln (exp. +1.4mln), Distillate +1.5mln (exp. -1.3mln).
Exxon (XOM) CEO sees the potential for continued tight global oil markets and sees oil supplies tight as some producers pull back, while the CEO added that the Co. is prepared for a potential commodity downturn.

US State Department report stated that Russia violated the New START treaty cutting long-range nuclear arms by refusing to allow on-site inspections and rebuffing Washington’s requests to meet to discuss its compliance concerns, according to WSJ.
US imposed new export restrictions on seven Iranian entities for aiding Russia through drone production.

Chinese Premier Li said will keep the economic operation within a reasonable range and noted that maintaining financial stability and fending off risks are still long-term and arduous tasks, while he added that China will keep the Yuan exchange rate basically stable, according to state media.
White House said one goal of US Secretary of State Blinken's trip to China is to try to revitalise some topics of discussion between the US and China.

ECB is to stress test 99 euro area banks in 2023 in which it will examine 57 of the euro area’s largest banks as part of a regular EBA-led EU-wide stress test and will conduct a parallel stress test for 42 directly supervised banks outside the EBA sample.

DATA RECAP

EU GDP Flash Prelim QQ (Q4) 0.1% vs. Exp. -0.1% (Prev. 0.3%)
EU GDP Flash Prelim YY (Q4) 1.9% vs. Exp. 1.8% (Prev. 2.3%)
French CPI Prelim MM NSA (Jan) 0.4% vs. Exp. 0.5% (Prev. -0.1%)
French CPI Prelim YY NSA (Jan) 6.0% vs. Exp. 6.1% (Prev. 5.9%)
German Unemployment Change SA (Jan) -15k vs. Exp. 5.0k (Prev. -13.0k)
German Retail Sales MM Real (Dec) -5.3% vs. Exp. 0.2% (Prev. 1.1%, Rev. 1.9%)
German Retail Sales YY Real (Dec) -6.4% vs. Exp. -1.8% (Prev. -5.9%)