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BULLET POINTS

  • Risk appetite back with a bang after the Fed signals it's in no hurry with its next rate hikes
  • Emerging assets, credit and stocks all rally on Fed; Sovereign yields dive, curves bull flatten
  • Fed hikes benchmark rate by 25bp to a range of 0,75-1.00% as widely expected in a 9-1 vote
  • Known dove, Minn Fed President Kashkari, the sole dissenter against the hike
  • Dot plots little changed with median expecting 2 further hikes this yr and another 3 for next yr, same as prior
  • Median 2019 projection lifted by 9bps. However long term rate left unchanged at 3%.
  • Core inflation noted to be running below 2%, with Fed expecting inflation to stabilise around the 2% mark;
  • Dutch Elections: PM Rutte's VVD party easily beats Wilder's anti-EU Freedom party, winning 33 out of 150 seats
  • BOJ leaves policy unchanged as widely expected
  • Aust Feb jobs soft at -6.4k (f/c 16k, Jan 13.5k), Unemployment climbs to most since Jan 2016 at 5.9% (f/c 5.7)
  • NZ Q4 GDP underwhelms at 0.4% q/q (f/c 0.7, Q3 rev down to 0.8), 2.7% y/y (f/c 3.2, Q3 rev down to 3.3)
  • PBoC sets midpoint Usd/Cny at 6.8862, lowest since Jan 18 vs 6.9115 Wed, raises rates in OMOs


EUROPEAN PREVIEW

2 down 2 to go with the SNB & BoE up next. The BOJ as f/c left its monetary policy & econ assessment unchanged. The 25 bps hike by the Fed to 0.75%-1.0% along with an unchanged dot plot led to a classic buy the rumor sell the fact response which we feel has been overdone and it will not take long for Buck bulls to regroup & push the Buck higher. Bear in mind that the Fed is still the only CB among the developed nations to hike rates over coming months. US data likely to be Buck supportive with housing starts f/c at 1.260 mln units vs 1.246 mln prev, permits f/c at 1.260 mln units vs 1.293 mln & claims f/c at 240K vs 243K prev. With Brexit anxiety still high & Scotland looking to have a second independence referendum within 2-years, Mark Carney & Co will err on the safe side by keeping rates & the APF target unchanged. The market is still awaiting UK PM May pulling the trigger to invoke article 50. It will also likely be status quo for the SNB. The EUR upside is likely to slow as Eur/Usd approached 1.0750/00 and EMU Core CPI f/c unchanged at 0.9% y/y will be of little help. The weaker than f/c NZ Q4 GDP which came in at 0.4% q/q vs f/c of 0.7% with the y/y at 2.7% vs f/c of 3.1% & Aust -6.4K jobs vs f/c of +16.0K with the rate up to 5.9% vs 5.7% will likely see the very overbought Kiwi & Aussie succumb to a decent correction to the downside. VS


OVERNIGHT SESSION WRAPS

ASIAN FX CLOSE

USD/JPYEUR/USDEUR/JPYGBP/USDAUD/USDNIKKEI 225JGB Jun
OPEN113.381.0734121.701.2291.7709closedclosed
HIGH113.551.0746121.881.2296.7717updown
LOW113.161.0720121.491.2261.76770.01%0.04
CLOSE113.281.0726121.521.2267.768919,575150.36

16 MAR 06:00GMT BOJ left monetary policy unchanged as widely expected, which hardly impacted the Usd/Jpy, which had traded within a tight 113.35/55 range and likely to end little changed. Eur/Usd also traded in a tight 1.0720/45 range but succumbed to profit taking and wiill likely end with mild losses ahead of the EMU CPI reading. Cable which rose to a high near 1.2295 was sold by specs and a leveraged account to a low near 1.2260 ahead of the BoE decision where the CB is expected to stay pat on rates and its APF target. The antipodeans were the biggest losers with Nzd/usd which rose to a high near 0.7045 sliding to a low near 0.6985 following the released of NZ Q4 GDP which came in at 0.4% q/q vs f/c of 0.7% with the y/y at 2.7% vs f/c of 3.1% while Aud/Usd which rose to a high above 0.7715 tumbled to a low near 0.7675 following the released of the Australian jobs data which saw -6.4K jobs loss vs f/c of +16.0k with the rate at 5.9% vs 5.7% prior. VS

US TREASURY CLOSE

10-YEARJun TENJun BONDMar S&PApr 0iL2/105/303/10/30
HIGH97-30+123-26148-172383.5049.04122.0109.333.7
LOW96-31122-26146-232364.0048.16117.6101.829.3
LAST97-25+
123-24148-132381.0048.84118.6108.430.5
CHANGE+27/32+28/32+1-18/32+17.90+1.12-3.1+3.9-3.0

TREASURIES CLOSE 3:09PM The Fed came across with the expected 25bps rate hike, but disappointed the bear/hawkish camp on every other component. A sharp rally emerged, led by the oversold 5yr sector, with off-sides outright and curve positions scrambled to cover and were in competition with new real money buyers of the belly. Curve wise, 2/10yr flattened by 2.8bps at 118.9, 10/30yr was wider by 2.5bps at 59.9 and the star of the day 5/30yr steepened by 4.2bps at 108.6 from an intra-day narrow at 101.8. Our near term objective would be the 50-day around 110.5, but the 200-day around 117 can not be ruled out. Some techs note a potential USM daily chart near term bottom is in place, but more importantly the multi-decade 30yr yield downtrend line survived its latest challenge! We favor holding expanded steepening and long USM call positions. JK


DAY AHEAD

GMTCODENAMEACTUALPERIODCONSENSUSPREVIOUS
00:00AUConsumer Inflation Expectation4%Mar4.1%
00:30AUUnemployment Rate s.a.5.9%Feb5.7%5.7%
00:30AUPart-time employment-33.5Feb58.3
00:30AUFulltime employment27.1Feb-44.1
00:30AUEmployment Change s.a.-6.4Feb1613.5
00:30AURBA Bulletin
00:30AUParticipation Rate64.6%Feb64.6%64.6%
01:30AURBA Foreign Exchange Transaction282Feb557
02:00JPBoJ Interest Rate Decision-0.1%-0.1%
02:00JPBoJ Monetary Policy Statement
05:30JPBoJ Press Conference
06:30NLUnemployment Rate s.a (3M)Feb5.3%
07:00NOTrade BalanceFeb25
07:00FIGross Domestic Product (YoY)Jan1%
08:00SKEU Norm Inflation (MoM)Feb0.3%
08:00SKEU Norm Inflation (YoY)Feb0.9%
08:00ATHICP (MoM)Feb-0.6%
08:00ATHICP (YoY)Feb2.1%
08:00CZProducer Price Index (YoY)Feb2.1%
08:00CZProducer Price Index (MoM)Feb0.7%
08:30CHSNB Interest Rate Decision-0.75%-0.75%
08:30SEUnemployment RateFeb7.3%
08:30HKUnemployment rateFeb3.3%
09:00CZCurrent Account (MoM)Jan-22.11
10:00EMUConsumer Price Index - Core (YoY)Feb0.9%0.9%
10:00EMUConsumer Price Index (MoM)Feb0.4%-0.8%
10:00EMUConsumer Price Index - Core (MoM)Feb-1.7%
10:00EMUConsumer Price Index (YoY)Feb2%2%
11:00TRTCMB Interest Rate DecisionFeb8%
11:30INTrade Deficit - RBIQ4-25.6
11:30INCurrent Account Balance $Q4$-3.4$
11:30INBalance Payment $Q4$8.5$
12:00GBBOE MPC Vote Unchanged
12:00GBBOE MPC Vote Hike
12:00GBBoE Interest Rate Decision0.25%0.25%
12:00GBBoE Asset Purchase Facility�435��435�
12:00GBMonetary Policy Summary
12:00GBBOE MPC Vote Cut00
12:00GBBank of England Minutes
12:00GBBOE MPC Vote Hike00
12:00GBBOE MPC Vote Unchanged99
12:30USHousing Starts ChangeFeb-2.6%
12:30USBuilding Permits ChangeFeb4.6%
12:30USHousing Starts (MoM)Feb1.261.246
12:30USBuilding Permits (MoM)Feb1.261.293
12:30USContinuing Jobless Claims03-03-20172.052.058
12:30USInitial Jobless Claims03-10-2017240243
12:30CAForeign portfolio investment in Canadian securitiesJan$9.45$$10.23$
12:30CACanadian portfolio investment in foreign securitiesJan$6.66$
12:30USPhiladelphia Fed Manufacturing SurveyMar3043.3
13:00RUIndustrial OutputFeb2.3%
13:00PLCurrent AccountJan�-533�
13:00PLCorporate Sector WagesFeb4.3%
13:00RUCentral Bank Reserves $$393.4$
14:00USJOLTS Job OpeningsJan5.455.501
14:30USEIA Natural Gas Storage change03-10-2017-56-68

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