Geo-political tensions remain elevated

Market movers today

• Today’s data calendar is fairly light in terms of data releases, with the highlight being US durable goods orders for February. Durable goods orders declined relatively sharply in the previous two months partly due to bad weather, so we expect to see a rebound that is a bit stronger than suggested by the current consensus expectations.

• The US Federal Reserve will release the final results from its two-step annual regulatory check-up of major US banks this evening. The Fed said last week that all banks but one passed the stress test and tonight the Fed presents further details and its verdict on the banks’ plans for paying out dividends or making stock buybacks.

• In Europe, US President Obama meets European Council President Von Rompuy and EU Commission President Barroso in connection with the EU-US summit in Brussels. Ukraine will likely be on the agenda but the summit is also expected to cover negotiations about a comprehensive trade agreement between the US and EU.

• There are several data releases from Sweden today, including the NIER survey. For more on Scandi markets see page 2.

Selected market news

Geo-political tensions remain elevated. Yesterday, Russia conducted military training exercises in Transdniestria, a mainly Russian-speaking separatist region of Moldova, which is a focus of tension following the annexation of Ukraine's Crimea region. Overall, however, the crisis does not appear to have escalated further, explaining the rebound in the Russian MICEX index and the rouble yesterday. Elsewhere, North Korea test-fired missiles into the sea just as US President Obama brought together leaders of Japan and South Korea at a meeting in The Hague.

Plenty of talk from central bank policymakers on both sides of the Atlantic yesterday. Most notably, Bundesbank President Weidmann told an audience in Berlin that quantitative easing (QE) was not ‘out of the question’ and also mentioned negative rates as the most appropriate measure to tackle a strong appreciation of the euro. However, Weidmann also said that these measures are ‘uncharted territory’ and he highlighted several practical challenges to QE, indicating that he remains opposed to such measures. In the US, among several other speakers, president of the Atlanta Fed Lockhart commented on the timeframe between the end of QE and the first hike, saying that the six months mentioned by Chairman Yellen are in his view a minimum, not a maximum.

Risky assets rebounded yesterday and European bourses led the rally. US equities closed the day higher after a choppy trading session, with sentiment being supported by stronger-than-expected US consumer confidence. Nonetheless, the US Treasury curve saw minor gains in the front end, reversing some of the flattening seen after the last FOMC meeting.