FC: EUROPEAN CLOSING REPORT: TUESDAY – 13TH – MARCH – 2018 March 13, 2018 at 04:31PM


US consumer price inflation data was the main focus for investors this afternoon but proved to be somewhat of a non-event – headline CPI was in line at +2.2% YoY, as was the core rate at +1.8%. Reaction was initially muted before the US Dollar began to move lower although this was attributed to news that Rex Tillerson had been replaced as the Secretary of State by former FBI Director Mike Pompeo. The Canadian Dollar was also knocked lower this afternoon after relatively dovish remarks from Bank of Canada Governor Poloz who Canada may be able to achieve “more economic growth without . . . generating higher inflation”. Sterling meanwhile has the outperformer this afternoon, gaining after UK Finance Minister Hammond delivered the Spring Statement which contained higher growth forecasts from the OBR. In equity space, European bourses have turned lower while Wall Street surrendered opening gains amid the latest firing/hiring in the White House. Oil prices have also moved lower with US crude futures losing close to two-percent at the recent low. Still to come today, the US Treasury are to sell $13.0 Bln of 30-year bonds at 17:00 GMT.


Key Headlines/Data:

*  US Corporate News:

  • Qualcomm (-4.5%)  |  Broadcom (+0.7%):Trump blocks Broadcom’s bid for Qualcomm on security grounds
  • Caterpillar (+0.4%): Three-Month rolling retail sales +33% globally
  • United State Steel (-6.4%): Sees FY18 Ad. EBITDA $1.7 Bln versus $1.5 Bln expected  |   Announces senior notes offering  |  Vertical Research cuts stock rating to ‘sell’ from ‘hold’

*  US Consumer Price Index (Feb):

  • CPI M/M +0.2% versus +0.2% expected, previous +0.5%
  • CPI Y/Y +2.2% versus +2.2% expected, previous +2.1%
  • Core CPI M/M +0.2% versus +0.2% expected, previous +0.3%
  • Core CPI Y/Y +1.8% versus +1.8% expected, previous +1.8%

*  US Real Earnings M/M (Feb) +0.3% versus +0.3% expected, previous -0.8% revised to -0.6%

*  UK ‘Spring Statement’ – OBR Forecasts:

  • Raises 2018 GDP to +1.5% from +1.4%, 2019 unch. at +1.3%, 2020 GDP unch. at +1.3%
  • Expects inflation to fall back to 2% target over the next 12-months
  • 17/18 budget deficit seen at 2.2%/GDP, down from 2.4%/GDP seen in November | 18/19 at 1.8%, down from 1.9%, 2020 unch at +1.6%
  • 18/19 Gilt issuance £102.9 Bln versus £100.7 Bln

*  @realDonaldTrump – Mike Pompeo, Director of the CIA, will become our new Secretary of State. He will do a fantastic job! Thank you to Rex Tillerson for his service! Gina Haspel will become the new Director of the CIA, and the first woman so

*  Trump later said he looks at Kudlow very strongly, and he has a very good chance of taking Cohn’s job

*  Bank of Canada Governor Poloz:

  • After looking at a much wider range of labour market indicators, the Bank has concluded that there remains a degree of untapped supply potential in the economy.
  • This is important, for it means that Canada may be able to have more economic growth, a larger economy, and therefore more income per person, without generating higher inflation.
  • The Bank of Canada has plenty of reasons to care about the state of the labour market. It has become a good deal healthier over the past year or so, but we still see some slack remaining.

*  Leader of the Italian Five Star Movement party said it is no longer time to leave the Euro.

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