• US President Trump revealed some of the details of his upcoming plans, although left markets slightly disappointed over the lack of specifics
• Asian equities traded mostly higher amid upbeat data, while USD was firmer amid hawkish Fed rhetoric
• Highlights include the German jobs report, UK mfg PMI, German CPI, US Personal Income, BoC rate decision, construction spending

US President Trump’s Joint Congress Address:

• US President Trump delivered a speech to Congress in which he stated he is to ask Congress for a USD 1tln infrastructure investment, which will be financed by both public and private capital.
• Trump stated they are working on historic tax reform so the US can compete and will reduce tax rate on US companies, adding that "it will take a big, big cut".
• Trump commented that he will repeal and replace Obamacare and that he is to bring down the high price of drugs.
• Trump stated that they will soon begin construction of 'Great wall' on the southern border.
  Note: US equity futures pared some gains during Trump’s speech although the price moves were relatively mild, while USD was pressured amid slight disappointment as the Congress address failed to provide any significant surprises or in-depth details. However, price moves were not sustained and on conclusion of the speech, USD resumed its strengthening trend.

ASIA

Asia equity markets traded mostly higher as the region digested a deluge of data including better than expected Chinese PMIs figures. Despite this, ASX 200 (-0.1%) was dampened by the negative lead from Wall St where the DJIA snapped a 12-day win streak, while better than expected Australian GDP also failed to inspire as the strong data also reduces prospects of future RBA action. Nikkei 225 (+1.4%) was underpinned by a weaker JPY, while Shanghai Comp (+0.3%) and Hang Seng (+0.2%) gained after the latest PMI figures in which the Official Manufacturing PMI and Caixin Manufacturing PMI surpassed estimates, although upside was capped on a weak PBoC liquidity operation and after Non-Manufacturing PMI fell to a 4-month low. 10yr JGBs saw spill-over selling from T-notes which were weakened following hawkish Fed comments that suggested a March hike was firmly on the table, while the BoJ’s Rinban announcement also added to the pressure as the central bank reduced its purchases in 1yr-3yr and 3yr-5yr government debt.

Chinese Official Manufacturing PMI (Feb) 51.6 vs. Exp. 51.2 (Prev. 51.3). (Newswires)

Chinese Non-Manufacturing PMI (Feb) 54.2 (Prev. 54.6); 4-month low.

Chinese Caixin Manufacturing PMI (Feb) 51.7 vs. Exp. 50.8 (Prev. 51.0). (Newswires)

PBoC injected CNY 10bln 7-day reverse repos, CNY 10bln in 14-day reverse repos and CNY 10bln in 28-day reverse repos.

PBoC set CNY mid-point at 6.8798 (Prev. 6.8750). (Newswires)

EUROPE

Latest French Election IFOP Poll; First Round: Le Pen 25.5% (Prev. 26.0) Macron 24.0% (Prev. 24.5%) and Fillon 20.5% (Prev. 20.0%). Second Round: Macron 62% (Unch.), Le Pen 38% (Unch.). (Newswires)

UK

UK BRC Shop Price Index (Jan) Y/Y -1.00% vs. Exp. -1.40% (Prev. -1.70%). (Newswires)

US President Trump is said to postpone his state visit to the UK, according to reports in The Sun. (Newswires)

Prime Minister Theresa May’s government is set for defeat on a key vote in the House of Lords over the right of European Union nationals to stay in the U.K., a result that would complicate her Brexit timetable. Defeat on Wednesday will mean the premier will have to persuade the elected House of Commons to vote again to overturn the amendment, or accept defeat and agree to give the unilateral guarantee she wants to avoid. (Newswires)

FX

USD strengthened on hawkish Fed comments after Fed’s Dudley stated that the case for rate hikes is more compelling, while Fed’s Williams sees a March hike receiving serious consideration. This underpinned the greenback across the board with USD/JPY above 113.00 and GBP/USD below 1.2400, while markets were also reported to price-in as much as an 80% chance for a March hike. USD then briefly pared some of its gains as Trump’s Congress speech failed to provide any significant insights with analysts at Informa also noting profit taking by HFTs and leveraged accounts in USD/JPY, although this was brief as the greenback resumed its strengthening trend on conclusion of Trump’s address. AUD edged gains against most counterparts following better than expected GDP and Chinese Manufacturing PMI data, although upside in AUD/USD was capped by the aforementioned USD strength.

Australian GDP Growth Rate (Q4) Q/Q 1.1% vs. Exp. 0.8% (Prev. -0.5%). (Newswires)

Australian GDP Growth Rate (Q4) Y/Y 2.4% vs. Exp. 2.0% (Prev. 1.8%)

COMMODITIES

Gold (+0.5%) prices were pressured by a firmer USD following the hawkish Fed’s comments with markets beginning to price in as much as an 80% chance of a Fed hike this month. Elsewhere, WTI crude futures traded flat overnight, despite a build in APIs of 2.5mln barrels, while copper was underpinned amid the risk on sentiment felt in China after better than expected official and non-manufacturing PMI data.

US API Crude Oil Inventory Report (Feb 24) W/W 2500K (Prev. -893K). (Newswires)

Codelco Chairman Landerretche states copper surge to around USD 2.70/lb is well supported by improving demand prospects and sees demand increasing 3.5% this year vs. Prev. 2.0%, while sees avg. prices between USD 2.6-2.7/lb vs. Prev. USD 2.40-2.50/lb

US

In fixed income, all eyes remain focused on Trump’s upcoming address before congress and trade has reflected this with the 10y June T-note futures closing down half a tick at 124.18+.

Fed Discount Rate Minutes showed that 10 of the 12 Fed banks wanted no change in the discount rate in January. (Newswires)

Fed's Dudley (Voter, Dove) said the case for rate hikes is more compelling. (Newswires)

Fed's Kaplan (Voter, Neutral) said the rate path is more important than timing of the next hike. (Newswires)

Fed's Harker (Voter, Neutral) repeated that tspanee rate hikes in 2017 are appropriate. (Newswires)

Fed's Williams (Non-Voter, Hawk) sees a March hike getting serious consideration. Williams also added he still is comfortable with 3 hikes this year and does not see need to delay rate hike. (Newswires)

Fed's Bullard (Non-Voter, Dove) stated that the Fed has essentially reached its dual mandate and should allow the balance sheet to normalize naturally. Bullard also added that the policy rate can stay relatively low over the horizon and that he still expects 2% growth, thus no reason to be aggressive on rate hikes (Newswires)