Rise and shine everyone and Happy Friday!

It’s the monthly Options Expiry today. Remember markets may be more volatile than usual.

We’re seeing the markets come under pressure anyway. The hotter inflation theory being expressed in yields seems to finally be catching up. That’s one reason.

The other reason is also Japan to a certain extent. Yields are rising in Japan on bets that the BoJ will end the negative interest rate policy on March 19, and that’s putting pressure on the Nikkei and the Nasdaq. There is a correlation between the two. The BoJ bets are being pared somewhat today, and the Nikkei is seeing some relief.

The US Dollar also rose yesterday with Oil crossing $80/barrel. This could have something to do with the IEA talking about an oil supply deficit in 2024, as the OPEC+ keeps production cuts in place. Oil is seeing some pressure during this morning’s trading but still remains above $80/bbl.

Yields are taking a breather, and US Equities are higher. The US dollar remains flat, while Gold trades higher and Bitcoin is recouping some of its losses. Bitcoin fell back to $66k yesterday.

The focus today will be the Michigan Consumer Sentiment reading at 10 am ET.

Big Stories

US Retail Sales

• February retail sales increased 0.6% month-over-month (Consensus 0.7%) following a downwardly revised 1.1% decline (from -0.8%) in January.

• Excluding autos, retail sales rose 0.3% month-over-month (Consensus 0.5%) following a downwardly revised 0.8% decline (from -0.6%) in January.

Category Sales

• Auto sales were up by 1.6%.

• Gas station sales rose by 0.9%.

• Electronics stores saw a 1.5% increase.

• Miscellaneous stores and food and beverage stores saw increases of 0.6% and 0.1%, respectively.

• Sales fell in furniture stores (-1.1%), clothing and accessory stores (-0.5%), health and personal care stores (-0.3%), and department stores (-0.2%).

Overall, the report will likely weigh on US GDP calculation.

China

China left its 1-year Medium Term Lending FAcility rate unchanged and withdrew liquidity from the banking system, to maintain currency stability which seems to take priority over stimulus at the moment. China’s home prices continued to fall in February, yet another sign that there isn’t enough support for the ailing property market.

In other news, New Bank Loans fell to CNY 1.45 trillion in February 2024, down from a record CNY 4.92 trillion reported in January and missing market forecasts of CNY 1.50 trillion, despite the central bank's rate cuts.

Meanwhile, the Chinese government has quietly asked EV markers to sharply increase their purchases from local auto chipmakers in a campaign to reduce reliance on Western imports.

Chart of the Day

Traders betting on Fed rate cuts are now more aligned with the Fed’s projections of three cuts. Next week’s Fed meeting also brings us an update to the Summary of Economic Projections and it will be interesting to see whether these projections have been revised lower, in light of higher inflation readings in the last two months.

Articles from MacroVisor this Week

• Investing Idea: A Sector with Room to Grow

• Macro Morsels: Previewing February Retail Sales

• Macro Morsels: PPI Data Reveals Rising Inflation Pressures

Other Stories

• Intuitive Surgical (ISRG) is trading higher as the FDA provides 510(k) clearance for da Vinci

• OpenAI is in talks to raise money from Abu Dhabi for the firm’s new AI chip venture it hopes will reduce its reliance on Nvidia semiconductors.

• Samsung on course to receive $6 bln to expand investment in the U.S.

• TikTok ban unlikely to be fast-tracked in the Senate

• Nippon Steel pushes back against scrutiny over acquisition of U.S. Steel (X)

• United Airlines leasing Airbus jets to replace delayed orders from Boeing

• Inflation in Sweden sees a welcome drop to 4.5% from 5.4%.

Calendars

(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)