US consumer confidence takes centre stage

In focus today

From the US, the Conference Board's February consumer confidence index is due for release. The previous edition showed a clear weakening in household sentiment. ADP's weekly private sector employment estimate will also be released. In the afternoon, Chicago Fed's Austan Goolsbee, Atlanta Fed's Raphael Bostic and Boston Fed's Susan Collins will be on the wires. Overnight European time, US president Trump will give the annual State of the Union speech.

In Hungary, the Central Bank of Hungary is expected to deliver its rate decision. We forecast a cut to 6.25% in line with consensus.

Economic and market news

What happened overnight

In China, the People's Bank of China held its 1-year and 5-year loan prime rates unchanged at 3% and 3.5%, respectively, as widely expected.

What happened yesterday

In Germany, the Ifo index surprised on the upside in February like the PMIs in another positive signal for the economy. Both the assessment of the current situation and expectations rose. The current situation is now back at the levels seen last summer painting a picture of a slowly rebounding economy. 

In Brussels, the European Parliament postponed ratification of the EU-US trade deal amid concerns that Trump's new unilateral 15% tariff breaches the 'Turnberry accord' agreed last summer. Meanwhile, China has urged Washington to remove unilateral tariffs, India has delayed planned trade talks, and the UK has warned that "nothing is off the table" if the US fails to honour their 10% tariff deal. Today, the global tariff will start at 10%, with the administration working towards raising it to 15% under a separate order that Trump has yet to sign.

In the US, Fed Governor Waller stated that recent productivity growth is unrelated to AI. He noted that falling vacancy rates without rising unemployment would be unusual and pointed to declining labour demand outpacing supply over the past year. This would imply a weakening labour market balance, which supports the case for further rate cuts.

Equities: Global equities were on the backfooting yesterday declining 0.8%, with the onset of the decline starting on US open. S&P500 declined 1.0%, Nasdaq, 1.1% while Russell2000 was down 1.6%. Stoxx600 was down 0.5%. The biggest declines were in the financials and consumer discretionary, where the asset management companies and banks were hit the most in the former category and automobiles in the latter. Consumer stables and health care were the biggest winners yesterday. That said, when looking across the equity space, the cross-moving theme for yesterday's decliners were amongst AI exposed companies. Overnight, futures are up, and Asia mixed.

FI and FX: Negative risk-sentiment with renewed AI fears pushed US stocks lower with AI exposed companies being among the largest losers. US treasury rates declined and cryptocurrencies experienced once more a negative day. EUR/USD fell back below the 1.18 level yesterday in line with the broader risk sentiment as the rally following US Supreme Court's ruling against IEEPA tariffs faded. EUR/SEK and NOK/SEK traded both higher during yesterday's session, consistent with historic patterns where scandies tend to weaken in a risk-off environment. Today's focus will be on President Trumps State of the Union speech which is supposed to start at 9:00 p.m. ET.