"The pricing of a Fed March rate hike has climbed from ~30% to 44% while odds of a June hike rose to 80% in the wake of yesterday’s strong US CPI and retail sales reports. Fuelling expectations, Dudley said he sees the balance of risks shifting to more growth than expected (rather than less) and the Fed raising rates a little further in coming months. Rosengren and Harker also signalled the need for a faster pace of hikes. The S&P hit another record high yesterday (+0.5%) with healthcare (+1.2%) and financials outperforming (0.7%). USTs fell by ~2bps, as 10yr yields pulled up ahead of 2.50%."
"Despite the ratcheting up in Fed rate hike expectations, USD longs bailed (profit-taking, more sellers than buyers) and the DXY is down by as much as ~0.8% to since yesterday’s highs."
"Initial jobless claims look poised to remain near the cycle/all-time lows. And while Philly Fed should remain comfortably in expansion territory, our US Strategists think the elevated print last month probably overstated the level of activity. New orders relative to inventories suggest a more modest pace."