It is the beginning of a new month and the economic calendar is loaded with publications today. There was a retail sales report from Switzerland earlier today, which went largely unnoticed by the markets. Instead, investors’ attention today will be on the multitude of PMI reports for February that are going to be published all over the world.
PMIs from Spain, Germany, and Italy were already released. Italy underperformed slightly but the other two readings were better than the forecasts. The eurozone-wide reading also exceeded investors’ expectations.
The United Kingdom published better than anticipated PMI reports as well, together with positive data on mortgages.
So far today, China has been the only major economy to report a poor PMI reading, largely connected to a new round of lockdowns and a lull for the Lunar New Year holidays recently.
Inflation rate reports are also in store for today, with Italy and Germany presenting their February numbers. Italy already reported a slightly higher inflation rate than the forecast, but Germany has yet to report.
Later today Canada and the United States will also publish PMI reports. There will be a few speeches from Federal Reserve officials as well.
The Fed speeches, together with statements from the ECB and RBA could hint at increased bond purchasing among central banks in an attempt to keep the yields a bit lower. They have been increasing due to the reflation trading that dominated the market over the past couple of weeks.
We expect to see an increase in US stock indices today due to the improving hopes of an economic recovery. On Saturday Joe Biden’s $1.9 trillion stimulus bill was successfully passed, which is boosting market optimism. In addition, the FDA approved the Johnson & Johnson Covid-19 vaccine today, giving the United States yet another weapon against the pandemic.
