- US stocks closed with marginal gains after a slight bid was seen heading into the settlement but were relatively rangebound in a day which was dominated by US and Russia high-level delegates holding a meeting in Riyadh regarding Ukraine. Following the gathering, the Russian side gave positive remarks with Russian Foreign Minister Lavrov noting that talks were “not unsuccessful”, while Ukrainian President Zelensky postponed his visit to Saudi Arabia until March 10th with sources stating that it was in order to not give legitimacy to US-Russia meeting.
- USD strengthened as US participants returned from the long weekend amid a higher yield environment and with headline newsflow dominated by US and Russia talks regarding Ukraine, while there were several recent Fed comments but had little sway on price action and the attention stateside turns to comments from President Trump and FOMC Minutes.
- Looking ahead, highlights include Japanese Machinery Orders and Trade Data, Australian MI Leading Index & Wage Prices, Chinese House Prices, RBNZ Rate Decision & Press Conference, Comments from US President Trump, Supply from Australia.
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LOOKING AHEAD
- Highlights include Japanese Machinery Orders and Trade Data, Australian MI Leading Index & Wage Prices, Chinese House Prices, RBNZ Rate Decision & Press Conference, Comments from US President Trump, Supply from Australia.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks closed with marginal gains after a slight bid was seen heading into the settlement but were relatively rangebound in a day which was dominated by US and Russia high-level delegates holding a meeting in Riyadh regarding Ukraine. Following the gathering, the Russian side gave positive remarks with Russian Foreign Minister Lavrov noting that talks were “not unsuccessful”, while Ukrainian President Zelensky postponed his visit to Saudi Arabia until March 10th with sources stating that it was in order to not give legitimacy to US-Russia meeting.
- SPX +0.24% at 6,129, NDX +0.23% at 22,164, DJI +0.02% at 44,556, RUT +0.50% at 2,291.
- Click here for a detailed summary.
TARIFFS/TRADE
- US President Trump said he will be announcing large companies that are coming back to the US related to chips and cars, while he added car plants are going to be built in the US and the auto tariff rate will be around 25%. Trump also stated pharmaceutical tariffs will probably be 25% or higher and will see announcements over the next couple of weeks. Furthermore, he said he was contacted by companies because of tariffs and that the EU has been very unfair to the US.
- US Trump aide Navarro is working closely with Commerce Secretary Lutnick and Trade Representative Greer, according to FT citing sources.
- China’s ambassador to WTO said US tariffs create tariff shocks that heighten economic uncertainty, disrupt global trade and risk global recession, while the ambassador added that US unilateralism threatens to upend the rules-based trading system and the WTO must have its voice.
NOTABLE HEADLINES
- Fed's Barr (voter) said AI presents some risks and AI's speed risks generating issues on a wider scale, while he also noted that they have made a lot of progress on inflation.
- Fed's Daly (2027 voter) said the world is uncertain when asked if there will be more rate cuts this year and noted that policy remains restrictive. Daly added that policy needs to remain restrictive until she sees that they are really continuing to make progress on inflation, while she wants to be careful before they make the next adjustment that there's enough pressure on inflation.
- US President Trump’s administration is reportedly planning to lay off 40% of the workers at the federal housing administration, according to Bloomberg.
DATA RECAP
- US NY Fed Manufacturing (Feb) 5.7 vs. Exp. -1.0 (Prev. -12.6)
- US NY Fed Manufacturing (Feb) New Orders 11.4 (prev. -8.6)
- US NY Fed Manufacturing (Feb) Prices Paid 40.2 (prev. 29.1)
FX
- USD strengthened as US participants returned from the long weekend amid a higher yield environment and with headline newsflow dominated by US and Russia talks regarding Ukraine, while there were several recent Fed comments but had little sway on price action and the attention stateside turns to comments from President Trump and FOMC Minutes.
- EUR gave up ground to the firmer buck but retained the 1.0400 handle with the attention in Europe on discussions between European leaders over the Russia-Ukraine conflict, while there were comments from ECB officials including Holzmann who stated that the March rate decision is to depend on data and that rate cuts cannot replace economic strategy.
- GBP marginally softened on the day but with the downside stemmed following recent better-than-expected jobs data and an acceleration in average earnings.
- JPY ultimately weakened with USD/JPY back at the 152.00 handle with the upside facilitated by the higher US yield environment.
- Canadian CPI Inflation MM (Jan) 0.1% vs. Exp. 0.1% (Prev. -0.4%)
- Canadian CPI Inflation YY (Jan) 1.9% vs. Exp. 1.9% (Prev. 1.8%)
FIXED INCOME
- T-notes were sold across the curve amid a plethora of corporate supply ahead of a 20yr bond auction.
COMMODITIES
- Oil prices prices were firmer with WTI notching up greater gains than Brent on account of no settlement on Monday due to the US Presidents' Day holiday, while newsflow on Tuesday centred around Russia and Ukraine, as high-level delegations from the US and Russia met in Riyadh. On the supply side, Russia's Transneft stated reduction of oil pumping volumes from Kazakhstan via CPC is estimated at around 30%, and consequences of the drone strike will take 1.5-2 months to eliminate.
- G7 is considering revisions to the Russian oil price cap, according to Bloomberg citing a draft document although it is still in the negotiation stage and may be revised.
- Russia's oil exports and transit from the Black Sea Port of Novorossiisk was suspended on February 18th due to bad weather but CPC Blend oil loadings are unaffected, according to Reuters citing sources.
- Kurdish Foreign Minister said all legal/technical arrangements have been made for the pipeline to restart and the "button just has to be pushed".
GEOPOLITICAL
MIDDLE EAST
- Israeli Foreign Minister Saar said they will begin negotiations on the second phase of the hostage deal and demand a complete demilitarisation of Gaza, while he will visit Brussels next week and Washington soon. Furthermore, he stated that "Turkey has been in collaboration with Iran to support Hezbollah".
- Round of talks on Phase 2 Gaza ceasefire deal have successfully concluded, according to Egypt's Al Qahera News TV cited by Reuters.
- Egypt is to hold an emergency Arab summit for Palestine on March 4th.
- Iranian Supreme Leader Khamenei posted that "The US's foolish plans for Gaza will lead nowhere".
RUSSIA-UKRAINE
- Ukrainian President Zelensky said his visit to Saudi Arabia has been postponed until March 10th, while he postponed his visit to Saudi Arabia in order to not give legitimacy to the US-Russia meeting in Riyadh, according to sources via Reuters.
- Ukrainian President Zelensky said there is no decision on the ending of war without Ukraine. Zelensky also said he had constructive talks with Turkish President Erdogan and negotiations should not happen behind their backs, while he added that Turkey and Europe should be involved in discussions regarding ending the war.
- Russian Foreign Minister Lavrov said talks were useful and they have agreed to appoint envoys as soon as possible, as well as remove barriers for diplomatic missions and agreed to form a process for Ukraine conflict settlement, while they also agreed to create conditions to restore cooperation in full. Furthermore, he commented that he can say today's talks were "not unsuccessful".
- Russia Sovereign Wealth Fund Chief Kirill Dmitriev said talks in Riyadh were positive, while Russian Aide Ushakov said Russia and US negotiations went well and it was a serious conversation on all issues. Ushakov said a Trump-Putin meeting is unlikely to take place next week but conditions for the meeting were discussed.
- Kremlin aide noted that the US chose Kellogg as the representative for US-Russian talks on Ukraine, according to RIA.
- US President Trump said had good talks on Ukraine and he is more confident, while talks with Russia were very good and do not think would have to remove all troops from Europe. Trump added if Europeans want peacekeeping troops in Ukraine then that's fine, as well as noted that Ukraine wants a seat at the table, and commented wouldn't the people have to say it has been a long time since they had an election.
- US Secretary of State Rubio said they agreed on four principles with Russians in Riyadh talks and will appoint teams to re-establish the functionality of their missions in DC and Moscow, while he added that work remains and today's meeting is the first step of a long and difficult journey. It was later reported that Rubio responded "We're just not at that level of conversation yet" when a US reporter asked if sanctions will be lifted on Russia's Lavrov, according to CBS's Jennifer Jacobs.
- US National Security Adviser Waltz said there needs to be a permanent end to the Ukraine war and there will be talks about territory and security guarantees, while he added that US President Trump is determined to move very quickly and noted there was no date set for a Putin-Trump meeting.
- US and Russia peace proposal would reportedly include Ukraine elections, according to Fox News' Jacqui Heinrich.
- As the US and Russia negotiate, intel reportedly shows Russian President Putin is not interested 'in a real peace deal' and is going through the motions but still thinks he can eventually control all of Ukraine, according to the sources cited by NBC News.
- France convenes a second meeting to discuss Ukraine and European security on Wednesday which will include NATO allies not invited on Monday. Furthermore, it was reported that among the countries invited are Norway, Canada, Baltic States, Czech Republic, Greece, Finland, Romania, Sweden and Belgium.
- Finland’s PM said Ukraine must have a right to apply for NATO membership and a possible Ukraine peace agreement must not weaken NATO defence and deterrence.
ASIA-PAC
NOTABLE HEADLINES
- China’s FX regulator said cross-border yuan usage has significantly increased, while they can better mitigate external shocks and help market trades to be more rational and orderly.
EU/UK
NOTABLE HEADLINES
- BoE Governor Bailey said "We are in a period of heightened uncertainty" and disinflation is continuing, while he added they are facing a weak growth environment in the UK. Bailey also noted a hump in inflation due to administered prices and said risks are on two sides and could go either way. Furthermore, Bailey said he is yet to see anything in the data (referencing the latest jobs data) that fundamentally changes the view of the BoE's outlook.
- ECB's Holzmann reiterated that services and core inflation are concerns, while he added that the March rate decision is to depend on data and that rate cuts cannot replace economic strategy.
- ECB's Cipollone said uncertainty is holding back investment and risks to growth are seriously skewed to the downside, while the output gap is likely to stay open, according to Reuters citing an MNI web event.
DATA RECAP
- UK Employment Change (Dec) 107k vs. Exp. 48k (Prev. 35k)
- UK ILO Unemployment Rate (Dec) 4.4% vs. Exp. 4.5% (Prev. 4.4%)
- UK Avg Earnings (Ex-Bonus) (Dec) 5.9% vs. Exp. 5.9% (Prev. 5.6%)
- UK Avg Wk Earnings 3M YY (Dec) 6.0% vs. Exp. 5.9% (Prev. 5.6%, Rev. 5.5%)
- German ZEW Economic Sentiment (Feb) 26.0 vs. Exp. 20.0 (Prev. 10.3)
- German ZEW Current Conditions (Feb) -88.5 vs. Exp. -90.0 (Prev. -90.4)
- EU ZEW Survey Expectations (Feb) 24.2 (Prev. 18)
