Good morning and welcome to episode 797 of āTalking Bullā. Here are the latest headlines today, German inflation holds at 8.7%, Hawkish Bundesbank rhetoric, Euro strengthens, Mixed US ISM data, US yields move higher, Risk appetite dips, BoEās Bailey watching the data & Euro-Zone inflation Thursday.
We take a technical look at key markets that are likely to be impacted by today’s events. Also, we participate in a āGun to the headā challenge where each of us calls a live trade. These will expire at 9pm tonight and we will keep track of the progress over time.
We hope you enjoy it!
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Show notes:
Joe was offside 0.13R on CHFJPY. Steve was stopped on Natural Gas.
We have included an illustration based on a Ā£1000 account. This will follow the combined return of our morning trades by risking 1% of the trading capital per trade. The 1% risk is a variable monetary amount and will rise and fall based on the success of the calls.
We are currently up 200.83% collectively since we began recording Talking Bull on the 30th October 2019.
News
German inflation holds at 8.7%
German consumer prices increased 0.8% for February with the year-on-year inflation rate unchanged at 8.7% and above consensus forecasts of 8.5%.
Hawkish Bundesbank rhetoric
Bundesbank President Nagel stated that significant increases in interest rates are necessary beyond the March increase. Markets are pricing around a 65% chance that the ECB will hike by 50 basis points in March with the remainder expecting a 75 basis-point hike.
Euro strengthens
Hawkish Bundesbank rhetoric and optimism over a rebound in the Chinese economy triggered Euro buying on Wednesday, especially on the major crosses.
Mixed US ISM data
The US ISM manufacturing index increased marginally to 47.7 for February from 47.4 the previous month, but slightly below consensus forecasts and remained in contraction territory for the fourth successive month. New Orders and production also remained in contraction for the month and there was a small decline in employment for the month.
The prices index moved back into positive territory with a reading of 51.3 from 44.5 previously and stronger than expected.
US yields move higher
Treasuries lost ground after the US data with concerns that inflation would remain higher than expected and force a more aggressive Federal Reserve stance.
The 10-year yield increased to near 4.00% and moved above this level to 6-month highs on Thursday.
Risk appetite dips
Higher US yields hampered risk appetite and unsettled equity markets amid fears that interest rates will have to stay stronger for longer.
BoEās Bailey watching the data
Bank of England Governor Bailey stated that he would advise caution in suggesting that the central bank was done with rate hikes or that further rate hikes were inevitable.
He added that some further rate hikes could be appropriate, but nothing is decided and he reiterated that the bank is data dependent in decision making.
Euro-Zone inflation Thursday
The latest Euro-Zone inflation data will be released on Thursday.
Consensus forecasts are for a decline in the annual rate to 8.3% from 8.6%, but the whisper number will be higher.
Data Today
10.00: Euro-Zone consumer prices.
12.30: ECB minutes
13.30: US jobless claims
Key events over the next week
March 3rd: US ISM services index
March 7th: Reserve Bank of Australia policy decision.
March 7th: Fed Chair Powell testimony
March 8th: Bank of Canada rate decision
March 10th: Bank of Japan policy decision
March 10th: US employment report
March 10th: Canada employment report
Gun to head challenge – Update
Today’s trade idea
Have a great week everyone.