US consumer confidence surprising positively

Market movers today

Another day with a thin data calendar. February Retail Sales will be released for Sweden and Norway this morning.

Norwegian retail sales bounced back a bit in January after the sharp fall in December, but the underlying trend is still down, thanks to a combination of reduced purchasing power and the shift towards services after the economy reopened in spring 2022. Figures from BankAxept for card purchases in February suggest that spending dropped back again slightly, so we expect retail sales to fall 0.8% m/m, continuing the underlying downward trend.

In Sweden retail sales figures as well as NIER business and household survey to be published in Sweden. The latest NIER survey from February showed a slight improvement for corporates, with better order inflow and slightly higher hiring plans than during January. Retail sales figures on the other hand reflected a direr picture last month. We expect today's number to confirm the image of increasingly pressed Swedish households and a corporate sector that holds up surprisingly well.

The Czech National Bank is expected to leave rates unchanged in its meeting today.

ECB's Schnabel will be on the wires late in the evening, while the Fed's Barr testifies to the US House financial services committee on bank oversight.

The 60 second overview

Market recap: It has been fairly quiet overnight with most notably Chinese equities performing well following news of a revamp of Alibaba Group Holdings. AUD rates are a little lower as Australian CPI released overnight fell short of market expectations with headline inflation falling from 7.4% Y/Y in January to 6.8% in February. Equity futures are generally trading modestly in green while yields are a little higher. Commodities are little changed.

US economic data surprising positively. Yesterday's release of the Conference Board's consumer confidence index revealed a surprise rise in the main index from 103.4 to 104.2. Following recent market jitters and renewed focus on the risk of a US recession consumer confidence was widely expected to drop considerably. Hence the release was a clear positive surprise likely reflecting how US consumers still enjoy a strong job market situation even if a slightly smaller share of respondents now find "jobs plentiful" compared to one month ago.

CDS trade. Last Friday's trading session was dominated by surging European bank concerns amid a sudden focus on Deutsche Bank. Since Friday market commentators have been looking for reasons why Deutsche Bank suddenly took centre stage without any obvious triggers or headlines hitting markets. Now market consensus seems to settle on a large single trade in the fairly illiquid Deutsche Bank 5Y credit default swap - a derivative offering protection against default - which seemingly sent the price soaring and drove widespread panic and concern in banking stocks, rates and equity markets in general.

Since Friday German and European regulators have underlined an increased focus on risks but also that they believe the banking sector is in a solid shape and much better capitalised than in 2007 and 2008.

Hungary central bank. Yesterday the Hungarian central bank (MNB) kept policy rates unchanged - i.e. benchmark rate of 13.0% and one-day deposit rate of 18.0%. While this was largely expected the HUF still gained strongly as the MNB argued against Primer Minister Orban's urge for rate cuts. The MNB argued that a "trend-like improvement" to the risk assessment is necessary before considering making changes to the current policy setting which at this stage is "not on the agenda" according to Deputy Governor Virag.

Equities: Global equities slightly higher yesterday despite US markets dragging the overall performance lower. Once again it was value driven outperformance and partly defensive as the energy sector was outperforming. Higher yields the natural candidate for growth stocks to struggle. Worth noting, VIX lower again yesterday and now below 20. Implied equity vol is now back around the level before the SVB driven vol spike. The same cannot yet be said about bond vol though it is moving lower as well. In US Dow -0.1%, S&P 500 -0.2%, Nasdaq -0.5% and Russell 2000 -0.1%. Asian markets mostly higher this morning driven by the Chinese stock trade in Hong Kong. US and core European futures in green as well this morning. Credit: Sentiment remains fragile in credit markets and yesterday iTraxx Xover tightened 3.2bp, closing at 486.6bp, while iTraxx Main tightened insignificantly 0.6bp to close at 95.5bp. The primary market continues to be active with several mandates announced throughout the day.

FI: The normalisation in both rates and equities continues with rates rising as the focus returns to the high inflation numbers and the sentiment shift from "risk-off" to "risk-on". 10Y Treasury yields rose 4bp, while 2Y Treasuries rose 13bp.

FX: In a session characterised by further banking-fear relief cyclically sensitive and commodity currencies were generally the big outperformers. HUF was the biggest winner following the MNB rate decision and higher European bank stocks. EUR/USD is back around the 1.0850-levels which is where the cross traded prior to Friday's Deutsche Bank fears.