US cash equity markets are lower at the closing bell (DJIA -0.7%, S&P -0.6%, NASDAQ -1.0%). Bourses had opened to the upside earlier today but reversed course, along with the US Dollar, after news broke that Rex Tillerson had been replaced as the Secretary of State by former FBI Director Mike Pompeo. We later learned that the Under Secretary of State Steve Goldstein is being fired for contradicting the account of Rex Tillerson’s dismissal. In later remarks, Tillerson said the campaign of maximum pressure against North Korea has succeeded beyond expectations, adding he has achieved cease-fires in Syria that prevented loss of life but much more needs to be done. Tillerson stated there is much work to do to establish a clear relationship with China, adding if Russia continues on its current path it will become increasingly isolated. Treasuries meanwhile are in the green after a fairly dull US CPI report – headline CPI was in line at +2.2% YoY, as was the core rate at +1.8%. There was also minimal reaction to the US $13.0 Bln 30-year bond sale that stopped through 0.5 basis points to 3.109%. Elsewhere, the Canadian Dollar is still the laggard among the G10’s after relatively dovish remarks from Bank of Canada Governor Poloz who said Canada may be able to achieve “more economic growth without . . . generating higher inflation”. In energy space, US crude futures settled at $60.71 (-$0.65). In other news, the draft G20 communique said one risk to outlook on the global economy is a retreat to inward looking policies.
* @NBCNews – BREAKING: Under Secretary of State Steve Goldstein is being fired for contradicting the account of Rex Tillerson’s dismissal, White House official
* US sold $13.0 Bln of 30-Year Bonds:
• Bid to Cover: 2.38, previous 2.26
• Indirect Bidders: 58.0%, previous 61.2%
• Direct Bidders 14.8%, previous 8.1%
• Yield: 3.109% (WI: 3.114%)
* Russian Foreign Ministry spokesman, responding to poisoning accusations, said no one should threaten a nuclear power.
* US eyes tariffs to punish China for intellectual property theft (Nikkei):
• The U.S. is considering imposing tariffs on a wide range of Chinese products to punish the country for its intellectual property theft as President Donald Trump steps up his “America-first” protectionist policy.
* US Secretary of State Tillerson said it is important ensure the transition is smooth, adding his tenure will terminate on March 31, responsibilities will be delegated to Deputy Secretary Sullivan. He said the campaign of maximum pressure against North Korea has succeeded beyond expectations, adding he has achieved cease-fires in Syria that prevented loss of life but much more needs to be done. Tillerson stated there is much work to do to establish a clear relationship with China, adding if Russia continues on its current path it will become increasingly isolated.
* US Crude futures settle at $60.71 (-$0.65) | Brent Crude futures settle at $64.64 (-$0.31)
* G20 Draft Communique
• They will reiterate their summit conclusions on trade from July 2017 on March 20th.They are working to strengthen trade contribution to their economies.
• Strong fundamentals, resilient international monetary systems and sound policies are vital for exchange rate stability.
• Where feasible, flexible exchange rates can serve as a shock absorber.
• Disorderly FX movements and excessive volatility can hurt economic and financial stability.
• Will refrain from competitive devaluations and not target exchange rates for purposes that are competitive.
• One risk to outlook on the global economy is a retreat to inward looking policies.
• Crypto-assets raise issues related to money laundering, tax evasion and terrorist financing.
• At some point, crypto-assets could have financial stability implications.
• International standard-setting bodies should strengthen crypto-assets monitoring.
• To agree that international standard-setting bodies should assess whether a multilateral response is needed to crypto-assets.
* Moody’s: Trump administration’s infrastructure plan could expand PPP market, but hurdles remain
• The infrastructure plan proposed by the Trump administration could lead to increased private investment in public infrastructure by expanding the public-private partnership (PPP) market and supporting low-cost financing sources, according to a new report from Moody’s Investors Service. The infrastructure plan proposed by Senate Democrats complements the Trump administration’s plan by identifying funding sources for infrastructure spending priorities, which are greatly aligned in both plans.