Treasury Yields Touch One-year High; Stocks Slip

Treasury yields surged to the highest in a year, while US stocks pulled back from records as investors weighed how the increase in yields could impact risk assets. The S&P 500 fell by 0.06% to 3,932.59 while Dow Jones was up 64.35 points (0.20%) to 31,522.75.

New York Manufacturing Expands at Faster Pace as Prices Jump

Manufacturing in New York expanded in February by the most in five months as a growing number of factories in the state reported paying more for materials and charging higher prices. The Federal Reserve Bank of New York’s general business conditions index increased to 12.1 from 3.5 a month earlier, a report showed.

Fed’s Daly Plays Down Inflation as Officials Warn of Virus Risk

Federal Reserve officials said the economy continues to be disrupted by the pandemic with one regional central bank chief dismissing the threat that inflation could get out of hand. “I don’t think that’s a risk we should think about right now,” San Francisco Fed President Mary Daly told. “We should be less fearful about inflation around the corner and recognize that fear costs millions of jobs.”

Euro Area Added Jobs in Sign of Resilience Against Lockdowns

The euro area added jobs at the end of last year, suggesting businesses are looking beyond the latest economic woes caused by coronavirus lockdowns. Employment in the 19-nation currency bloc rose 0.3% in the fourth quarter for a second consecutive gain. The economy shrank 0.6% in the same period, slightly less than initially reported.

Europe Urged to Prepare Exit From US$2.9trn in Covid Help

European governments must find the right moment to wean the economy off unprecedented crisis support so they don’t harm growth in the long run, financial supervisors warned.While a wave of liquidity stabilized lending and kept businesses and households afloat during the virus shutdowns, extending such stimulus for too long could complicate its removal and make an eventual restructuring more painful, the European Systemic Risk Board said.

Singapore Trims Deficit, Digs Deeper Into Reserves for Covid Aid

Singapore plans to rein in its budget deficit as the economy recovers, while digging deeper into government reserves for a new S$11bn (US$8.3bn) package to help households and businesses rebound from the Covid-19 pandemic. “Even as our economy recovers gradually and some sectors grow well, some other sectors remain stressed,” Deputy Prime Minister Heng Swee Keat said. “Our fiscal approach must strike a careful balance between addressing our immediate needs and meeting our longer-term structural needs in a responsible manner.”

RBA Sees Significant Monetary Support Needed for Some Time

Australia’s central bank expects “very significant” monetary support will be needed for some time as it’ll take years to meet its inflation and unemployment goals, according to minutes of its February meeting. “The bond purchase program had helped to lower interest rates and had contributed to a lower exchange rate than otherwise,” the Reserve Bank said in the minutes released. “Given this, it would be premature to consider withdrawing monetary stimulus.”

Oil Holds Gains With US Energy Crisis Roiling Output, Refining

Oil held above US$60 a barrel in New York while gasoline futures surged as a deepening energy crisis in the US crippled the petroleum industry. Brent crude for April settlement rose US$0.05 to US$63.35 per barrel.

Source: Affin Hwang Research - 17 Feb 2021