US stocks extended earlier gains on Friday afternoon. Investors welcomed eased fears of a global trade war as Trump signalled an openness to exemptions beyond Canada and Mexico to his proposed import tariffs. Risk sentiment was also supported by improving relations between the US and North Korea amid speculation of a meeting between the two leaders. Sector wise, oil related stocks saw minor outperformance as prices rallied with US crude futures settling at $62.04 (+$1.92). Elsewhere, there was a mixed reaction to the US jobs report as the Dollar softened but US yields moved higher. The jobs figure itself was impressive with a hefty 313K jobs created in January, way above the market consensus for around 200K. However, average hourly earnings were on the soft side as the January print was revised a tenth lower to +2.8% y/y and February slowed to +2.6% y/y.
Over the weekend, US President Trump said a deal with North Korea very much in the making. In US steel and aluminium tariff news, Trump tweeted that he spoke with Australian PM Turnbulll and that they are working on a security agreement so they don’t have to impose steel tariffs on Australia, while Japan Trade Minister Seko said there is still time to seek steel tariff exemption. On the search for Gary Cohn’s replacement, the NYT reported that Christopher Liddell is strongly being considered for the role of Chief Economic Adviser. At the Fed, St. Louis Fed Governor Bullard said four rate hikes this year could slow the economy, adding if the Fed went too far they would start to put downward pressure on inflation in an environment where inflation is already below target. In oil news, the WSJ reported that OPEC is divided on the right price for oil, stating Iran wants oil around $60 a barrel, while Saudi Arabia wants it at $70.
A quiet slate ahead with the BoJ JGB buying operation the only highlight.