Pro-Russian supporters walk after breaking into the territory of the naval headquarters in Sevastopol, March 19, 2014. Around a dozen Ukrainian servicemen, unarmed and in civilian clothes, walked out of the Ukrainian naval headquarters in the Crimean port of Sevastopol on Wednesday after it was taken over by pro-Russian forces, a Reuters witness said.
Good morning. Here's what you need to know.
FOMC dominating the discussion. Yesterday's FOMC meeting and inaugural press conference for new Fed chair Janet Yellen is setting the tone globally. "T here is quite a bit of re-evaluation about just how hawkish the FOMC actually was, especially regarding Yellen’s off-hand remark that 'considerable period' represented six months or something like that," says David Ader, head of government bond strategy at CRT Capital. "The sense we’re getting — and trust that we are very much in this camp and so risk talking up our own view — is that the Fed really didn’t change things too much at all and that the market’s reaction was more a case of positions and expectations for a bit more dovishness which didn’t materialize as opposed to being really more hawkish."
The yuan continues to slide. The U.S. dollar-Chinese yuan exchange rate rose 0.6% to 6.2286, trading more than 1% higher than the PBoC's daily reference rate again on Thursday following a widening of the daily trading band to 2% over the weekend. The moves are likely being exacerbated by hedging needs related to structured products designed to appreciate on a rising yuan. "While some observers have placed a greater deal of emphasis on the 6.20 level as triggering large-scale losses on highly-leveraged investment instruments, our understanding is that it is more dynamic and the pressure has been increasing since 6.15," says Marc Chandler, head of global currency strategy at Brown Brothers Harriman.
Markets. Both S&P 500 futures and U.S. Treasury futures are losing ground this morning in the wake of Wednesday's FOMC-induced sell-off. Eurodollar futures continue to slide as market participants price in a faster rate-hike path. European equity indices are sliding across the board, and Asian indices gave up more than 1% overnight. Gold and copper futures are both down more than 1% as well.
Merkel on Russia. German chancellor Angela Merkel told the German parliament that "the EU summit today and tomorrow will make clear that we are ready at any time to introduce phase-3 measures if there is a worsening of the situation" between Ukraine and Russia, marking the latest comments from Western powers in the ongoing conflict. She also hinted that Russia may be expelled from the Group of Eight, saying, "As long as there is no political climate for an important format such as the G8, as is the case at the moment, the G8 no longer exists, neither does the summit nor the format as such."
Japan flows. In the week through March 14, Japanese investors bought ¥143.1 billion of foreign bonds after selling ¥617.9 billion in the previous week, and sold ¥137.1 billion of foreign stocks, following sales of ¥92.2 billion the week before. Meanwhile, foreign investors were buyers of Japanese bonds to the tune of ¥482.6 billion after selling ¥267 billion in the previous week, and sellers of ¥1.09 trillion of Japanese stocks, following purchases amounting to ¥383.9 billion the week before.
Initial claims. Weekly jobless claims figures are due out in the United States at 8:30 AM ET. Economists predict initial claims rose to 322,000 in the week ended March 15 from 315,000 the week before. Continuing claims are expected to have risen to 2.88 million in the week ended March 8 from 2.86 million in the previous week.
Philly Fed. At 10 AM, the Philadelphia Fed releases the results of its monthly Business Outlook Survey. The report's headline index is expected to rise to 3.2 from -6.3, marking an improvement in business conditions for regional manufacturers 0ver the last month following deterioration the month before.
Existing home sales. Also out at 10 AM are monthly existing home sales data. Economists predict sales fell 0.4% in February to 4.60 million units at a seasonally-adjusted annualized pace after tumbling 5.1% to 4.62 million units annualized in January.
TIPS auction. The U.S. Treasury will auction $13 billion of 10-year TIPS today. " The tremendous market volatility post-FOMC is adding much uncertainty to the $13 billion 10-year TIPS reopening," say Nomura interest rate strategists. "Prior to the Fed meeting we had thought demand could be decent for the 10-year TIPS supply, potentially from foreign accounts, while domestic investors should also embrace the liquidity event in their preference to own real, rather than nominal, yields. However, the massive real curve bear flattening after a hawkish Fed event should keep investors on a more cautious stance in bidding for $13 billion 10-year real duration."
MH370. Investigators have a new lead on missing Malaysia Airlines flight MH370. Australian authorities spotted two objects floating in the southern Indian Ocean off Australia via satellite imagery, and are looking into whether this may be possible debris from the missing plane.
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