US equity futures and global markets jumped higher at the reopen of Asian trading late on Sunday following news of the Senate’s passage of the Biden $1.9TN stimulus plan and the spike higher in oil following the Houthi drone attack on Aramco facilities in the Gulf, but have since dipped amid renewed reflationary fears which pushed Treasury yields as high as 1.61% overnight hitting tech stocks with lofty valuations even as value stocks and European markets were broadly in the red. After rising above $71, Brent has since faded gains and was last trading near where it closed Friday at $69. Bitcoin soared as HK-based firm the latest institution to convert cash into Ethereum and Bitcoin.
At 7:10 a.m. ET, Dow e-minis were down 16 points, or 0.07%, S&P 500 e-minis were down 16.5 points, or 0.44%, and Nasdaq 100 e-minis were down 154.25 points, or 1.20%.
Futures tracking the Nasdaq 100 index sank as much as 2%…
… as the passage of a $1.9 trillion COVID-19 relief package by the U.S. Senate lifted bond yields, pressuring richly valued technology stocks and sparking inflation concerns. As a reminder, on Saturday the Senate passed the stimulus package – the biggest in U.S. history – and President Joe Biden said he hoped for quick passage of the revised bill by the House of Representatives so he could sign it and send $1,400 direct payments to Americans. According to JPMorgan, every $1 trillion of fiscal stimulus adds around $4-$5 to companies’ earnings per share, implying 6-7% upside for the remainder of the year.
Analysts expect a sharp acceleration in inflation, stoked in part by the latest spike in oil prices, which on Monday climbed above $70 for the first time since the pandemic began.
“Between reflation, inflation risk and equity valuations, there’s plenty of reasons for the market to be jittery over the bond re-pricing,” said Natixis strategist Florent Pochon. “Equity valuations will of course remain a burning issue in particular for overly rich sectors,” he also said, adding however that sell-offs should be seen as buying opportunities, given that central banks remain “structurally dovish”.
Technology stocks, including Facebook, Apple and Amazon.com fell between 1.3% and 3% after bearing the brunt of the sell-off in the past three weeks on fears of higher interest rates as the benchmark 10-year Treasury yield scaled one-year highs. Tesla which surged as high as $900 in the year since the coronavirus-driven crash in early 2020, lost another 3.4% after closing Friday at $597.95 and was down another 5% in Monday premarket trading.
“Tech stocks are far from having corrected fully (after) their sharp rise, as is the case of Tesla, … as higher long-term interest rates compete with the dividend sometimes paid by such stocks,” said Sebastien Galy, senior macro strategist at Nordea Asset Management.
Tech stocks were hit by the latest selloff in Treasury futures, which after sliding during the European session, were off the lows. Early weakness was also spurred by strong China data. Yields were cheaper by up to 3.5bp across 7-year sector as belly of the curve continues to underperform into Treasuries weakness; 10-year yields around 1.59%, cheaper by ~2.5bp vs Friday’s close, with long-end little changed, flattening 5s30s by ~3bp. Belly underperformance extended 2s7s30s fly to cheapest since 2018, 2s7s10s fly to widest since 2017. In Europe, Bunds, gilts outperform Treasuries by 1.8bp and 2.5bp; focus is also on ECB’s weekly PEPP figures at 2:45pm London (9:45am ET). Long-end auctions and February CPI are key events this week.
Banks were among the rare gainers in pre-market trading as the yield on benchmark 10-year Treasuries stood near a 13-month high, while Wall Street’s fear gauge jumped nearly 3 points and was on course for its biggest one-day rise this month.
While US markets were torn between tech weakness and value/small cap strength, Europea was a sea of green, with the Stoxx Europe 600 Index climbing as much as 1.1% as cyclical sectors rally amid rising government bond yields. Banks were the top-performing sector, surging 2.9%, the most in three weeks. Auto stocks +2.1%, insurance +2%. Personal consumer goods are the biggest laggards, falling 0.8%, with utilities down 0.4%.
Unlike Europe, Asian stocks were a sea of red and closed at a two-month low as benchmarks in China and Hong Kong lead declines across the region as Chinese stocks posted their biggest decline in seven months, down 3.5%, on concerns that Chinese officials could tighten policy to rein in lofty valuations.
China’s CSI 300 Index entered a correction on concerns about liquidity conditions and lofty valuations in some recently favored names. Kweichow Moutai and other liquor stocks led the slump, while technology firms also weighed. Hong Kong’s Hang Seng Index fell, with Tencent contributing the most to the measure’s drop. Philippine stocks slid after the nation’s escalating virus infections topped 3,000 for a third day and the central bank governor said inflation may exceed its target in the next few months. Oil-related stocks in the region bucked the trend, advancing after Saudi Arabia said one of its crude facilities came under missile attack on Sunday, sending Brent prices above $70.
Japanese shares fell, erasing a morning advance, as declines in electronics and telecommunications companies offset gains in the bank and pharmaceutical sectors. The Topix and Nikkei 225 Stock Average both reversed gains of more than 1% to close lower. Tech shares dropped along with those of peers in Asia and futures on the Nasdaq 100 as worries over rising U.S. yields tempered appetite for growth stocks. A gauge of bank shares extended its climb into a fourth day, reaching its highest in more than a year amid continued gains in U.S. Treasury yields. “Investors are likely to be wary over the lack of fresh leads that can give local equities an extra boost from current levels,” said Ayako Sera, a market strategist at Sumitomo Mitsui Trust Bank. The market is likely to say devoid of direction amid a tussle between dip-buyers and those looking to take profits, she said. Local equities started the day higher after bargain hunters drove a rebound in U.S. stocks Friday. “On the U.S. stimulus plan, it will surely bolster the economy going forward, but a lot of it has been already priced in,” Sera said.
Emerging-market equities headed for their worst three-day slump since June as rising global bond yields fueled investor anxiety. Stocks from China and the Philippines led global declines, taking the three-day drop for MSCI Inc.’s equity gauge to 4.3%. Saudi Arabian shares defied the move, hovering near their highest in almost six years after the kingdom said it had intercepted an attack on a key oil site. An index of developing-nation currencies fell below its 100-day moving average amid a broad selloff from Mexico to Thailand and South Africa. In Turkey, the lira fell for a fifth day, touching its lowest since December. Traders are maintaining a cautious stance on risk assets amid renewed pressure from rising U.S. Treasury yields. A stronger dollar is also weighing on emerging-market currencies, even as the prospect of further gains in Brent crude has buoyed some oil-sensitive assets. “Until the macro environment clears up a bit, I’m afraid we have still some bumpy road ahead in the short term,” said Patty Cao, an assistant portfolio manager at Jupiter Investment Management Ltd. in London.
U.S. Treasury Secretary Janet Yellen tried to counter inflation concerns by noting the true unemployment rate was nearer 10% and there was still plenty of slack in the labour market. Yet as shown above, yields on U.S. 10-year Treasuries still hit a one-year high of 1.626% in the wake of the data, and stood at 1.594% on Monday. U.S. yields increased a hefty 16 basis points for the week, while German yields actually dipped 4 basis points.
In FX, the Bloomberg Dollar Spot Index advanced as much as 0.5%, to head for a fourth day of gains, as the greenback was higher against most of its Group-of-10 peers; 10-year Treasuries underperformed Bunds, pushing the yield above 1.6%. The euro fell fell to a more than a three-month low of $1.1865 as the diverging trajectory on yields boosted the dollar against the euro, which fell to a three-month low of $1.1891; the pound steadied. Japanese buying of U.K. sovereign bonds swelled to a record in January (but has since likely turmlbed) as Brexit risks waned and progress in Covid-19 vaccinations brightened the outlook. New Zealand dollar led G-10 declines as losses increased in European session; the Aussie outperformed the Kiwi amid support from options and a rally in oil and iron ore.
BofA analyst Athanasios Vamvakidis argued the potent mix of U.S. stimulus, faster reopening and greater consumer firepower was a clear positive for the dollar: “Including the current proposed stimulus package and further upside from a second-half infrastructure bill, total U.S. fiscal support is six times greater than the EU recovery fund,” he said. “The Fed is also supportive with U.S. money supply growing two times faster than the Eurozone.”
In commodities, oil prices were up the highest levels in more than a year after Yemen’s Houthi forces fired drones and missiles at the heart of Saudi Arabia’s oil industry on Sunday, raising concerns about production. Prices had already been supported by a decision by OPEC and its allies not to increase supply in April. As a result, Brent crude temporarily traded above $71 although output appeared to be unaffected after the missiles and drones were intercepted, and Brent then slide back under $70.
The European Central Bank meets on Thursday amid talk it will look at ways to restrain further increases in euro zone yields. Monday’s expected data includes wholesale inventories. Stitch Fix is reporting earnings.
- S&P 500 futures down 1% to 3,802.00
- MXAP down 1.2% to 203.49
- MXAPJ down 1.5% to 681.02
- Nikkei down 0.4% to 28,743.25
- Topix down 0.1% to 1,893.58
- Hang Seng Index down 1.9% to 28,540.83
- Shanghai Composite down 2.3% to 3,421.41
- Sensex little changed at 50,394.63
- Australia S&P/ASX 200 up 0.4% to 6,739.57
- Kospi down 1.0% to 2,996.11
- Brent futures down 0.2% to $69.24/bbl
- Gold spot down 0.6% to $1,690.58
- U.S. Dollar Index up 0.3% to 92.28
- SXXP Index up 0.6% to 411.15
- German 10Y yield little changed at -0.290%
- Euro down 0.4% to $1.1868
Top US News from Bloomberg
- China’s exports surged in the first two months of the year, reflecting strong global demand for manufactured goods and with figures partly skewed by the low base in 2020 when the economy was in lockdown
- President Joe Biden’s $1.9 trillion package will sail through the House when it takes up the bill on Tuesday, according to Democratic lawmakers and aides, even after proposals progressives championed were scaled back
- Goldman Sachs Group Inc. is seeing substantial demand for digital assets from institutions as it works to restart its cryptocurrency trading desk
- Germany will drastically speed up its vaccination campaign in the next few weeks with as many as 10 million weekly inoculations from the end of March, according to Finance Minister Olaf Scholz Deputy Governor Masayoshi Amamiya indicated the Bank of Japan may seek ways to allow more moves in Japan’s bond yields at next week’s policy review even after Governor Haruhiko Kuroda rejected the idea of widening the yield band
- For Swiss National Bank President Thomas Jordan, the franc’s precipitous drop to a 20-month low against the euro has come at a helpful moment after an open season for attacks on his policiesThe Biden administration is considering withdrawing all troops from Afghanistan by May 1 as it leans on President Ashraf Ghani to accelerate peace talks with the Taliban, including by supporting a proposal for six-nation discussions that include Iran
A quick look at global markets courtesy of Newsquawk
Asian equity markets eventually traded mostly lower as underperformance in tech sapped the early momentum from stimulus progress after the US Senate passed the USD 1.9tln COVID-19 relief bill which includes USD 1,400 of stimulus checks and with the House set to vote on the bill on Tuesday. ASX 200 (+0.4%) rallied at the open with the commodity-related sectors leading the advances, especially gold miners after the precious metal reclaimed the USD 1700/oz level and with M&A speculation driving price action in some of the notable gainers including Myer Holdings which is being eyed by a private equity group and with Pernod Ricard rumoured to be mulling a GBP 5bln bid for Treasury Wine Estates. Nikkei 225 (-0.4%) was indecisive and initially reclaimed the 29k level but then came off intraday highs with upside capped by a choppy currency and tech weakness. Hang Seng (-1.9%) and Shanghai Comp. (-2.3%) were also boosted at the open after strong Chinese trade data which showed February YTD exports surged by 60.6% Y/Y although Chinese markets then gave up their gains with some downplaying the strong data as partly due to low base effects and amid underperformance in tech which suffered in a continuation of the rotation out of the sector and resulted in the Hang Seng Tech Index dropping by more than 5%. Finally, 10yr JGBs declined as they tracked the downside in T-note futures which briefly fell beneath the 132.00 level shortly after the resumption of electronic trade, while the lack of BoJ purchases in the market today also kept demand subdued.
Top Asian News
European cash markets kicked off the week with gains across the board (Euro Stoxx 50 +1.0%) as the region reacted to the late-doors rally on Wall Street on Friday whilst shrugging off a mostly downbeat APAC lead. Since then, major bourses have waned off best levels with the UK’s FTSE 100 (+0.1%) the laggard amidst Sterling’s resilience to Dollar strength coupled by the reversal in crude prices – thus pressuring index heavyweights Shell (-0.1%) and BP (-0.4%). US equity futures meanwhile have somewhat stabilised in early European trade after drifting lower throughout the overnight session – with the tech-laden NQ futures (-1.5%) back on the boil and the YM (-0.1%) slightly more cushioned. Back to Europe, aside from the aforementioned pullback in oil prices, the broader sectors reflect a pro-cyclical bias, with defensives Healthcare, Utilities and Staples the laggards and in-line with the mass vaccination narrative. However, the top gainers include the likes of yield-sensitive Banks, Autos and Insurance. Onto individual movers, Pearson (+4.9%) is firmer post earnings after suggesting it is launching a strategic review of its international courseware and local publishing businesses. Pernod Ricard (-0.6%) trades softer following reports it is mulling a GBP 5bln bid for Treasury Wine Estates. Finally, Airbus (+2%) is firmer despite an overall downbeat delivery report which highlighted mass cancellations emanating from Norwegian Airlines, with the French aircraft-maker potentially latching onto the reopening narrative.
Top European News
In FX, only a relatively short-lived and shallow pull-back in DXY terms before the Buck bounced across the board to extend gains and the index probed beyond last Friday’s post-NFP peak within a 91.840-92.303 range. Technical analysts are now looking at Fib resistance around 92.450 – 23.6% retracement of the move from 102.97 to 89.20 – ahead of the next half round number as US Treasury yields rebound and the curve re-steepens into supply and the House vote on President Biden’s Usd 1.9 tn relief bill on Tuesday. More immediately, employment trends for February and January wholesale trade.
- NZD/CHF/AUD – The Kiwi is underperforming in advance of Q4 NZ manufacturing sales, with Nzd/Usd now at risk of losing 0.7100+ status as a high beta, and also not gleaning as much underlying support as the Aussie from Chinese trade data or a firmer PBoC CNY midpoint fix overnight, albeit neither helping the CNH subsequently slipping towards 6.5000 vs the Greenback. Hence, Aud/Usd is now below 0.7650 even though the Aud/Nzd cross remains elevated around 1.0750 in the run up to NAB business confidence, conditions and a speech from RBA Governor Lowe all on Tuesday. Elsewhere, the Franc continues to flounder irrespective of Swiss fundamentals like jobs data or the fact that weekly sight deposit balances indicate no intervention again, with Usd/Chf up near 0.9350 and through the base of a weekly chart formation.
- EUR/CAD/JPY – All unable to resist latest Greenback advances, as the Euro retreats further below 1.1900, the Loonie tests support/bids at 1.2700 and Yen pivots 108.50 after holding just a few pips above its US payrolls low awaiting a raft of Japanese data including household spending, earnings, Q4 GDP and money supply.
- GBP – No real reaction to comments from BoE Governor Bailey underlining a reticence towards using NIRP, but Sterling is holding up better than other majors against the backdrop of Dollar strength with some assistance via selling interest in Eur/Gbp following recent retracement or corrective price action. Indeed, Cable is holding above 1.3800 as the cross reverses from circa 0.8622 to almost 0.8580 pre-ECB and UK GDP later this week.
In commodities, WTI and Brent front-month futures have retreated from their overnight highs and have closed the gap seen at the electronic open – with the former back under USD 66.50/bbl (vs high 67.98/bbl) and the latter sub-70/bbl (vs high 71.38/bbl). Prices were bolstered overnight amid reports of further Saudi oil infrastructures being targeted by Houthi militia, but no personnel were injured nor infrastructure damaged. Nonetheless, crude markets at the time saw a pricing of geopolitical risk premia amidst the increasing frequency of these attacks, with other supportive factors including the US COVID bill’s passage through the Senate, OPEC’s surprise last week and the Chinese trade data overnight. However, since the cash open, prices have been on a downward trajectory as the complex moves in tandem with sentiment whilst being weighed on by a firmer Buck, potentially also prompting some profit-taking. Further, ING suggests that the bullish sentiment in the paper market is not reflected to the same extent in the physical market – “Investors appear to be looking further forward to expectations for a strong demand recovery over the second half of this year”, the bank remarks, adding that a significant correction could be on the cards if stronger demand does not materialise. Something else to ponder – some desks suggest that the OPEC+ surprise decision to maintain its production pact last week risks overheating the market and prompting further instability in the future. Also, as economies grasp onto a firmer footing via ramped up mass vaccinations, it begs the question of how long OPEC+ will keep this support, namely with regards to Saudi’s excess unilateral cut which was rolled over as a precautionary measure. Elsewhere precious metals bear the brunt of the rising Dollar with spot gold back below USD 1,700/oz (vs high USD 1,714/oz) and spot silver inching closer towards the USD 25/oz mark (vs high USD 26.925/oz). Base metals meanwhile trundle lower, in-fitting with the risk sentiment, with LME copper back under USD 9,000/t (vs high 9,120/t) after shrugging off the Chinese trade balance which was distorted amid lower base effects.
US Event Calendar
- 10am: Jan. Wholesale Trade Sales MoM, est. 1.0%, prior 1.2%; Wholesale Inventories MoM, est. 1.3%, prior 1.3%
DB’s Jim Ried concludes the overnight wrap
Hopefully today marks the starts the slow march to permanent normality here in the U.K. as all schools go back. We have one excited 5 year olds on our hands and two even more excited mid to late 40 year olds. The 3 years olds and Bronte are more nonplussed. From today you can also socialise with one other person outside on perhaps a park bench or for a picnic. I wonder how many park benches were packed this morning at just past midnight.
If you were meeting up with a long lost market friend there would be plenty to talk about at the moment after yet another fascinating week. The market continues to challenge the Fed but with the Fed so far refusing to engage too much with what are increasingly aggressive hiking expectations. The market now prices in a full US hike by early 2023 and nearly three by the end of 2023. As we’ll see in our usual weekly market wrap at the end today, 10yr US treasuries ended the week another 16.1bps higher last week after Brainard and Powell didn’t push too hard against the market and also due to strongish data including a decent payroll report on Friday. Having said that yields did close -6bps off their post payroll highs so it could have been worse for bonds.
On Friday in our CoTD we showed that by the end of February this was the third worst start to the year for 10yr treasury returns in at least 190 years. If yields stay where they are for the rest of March my early calculations are that Q1 will be the second worst in that period only behind 1980. So given the ups and downs of markets and especially inflation over the last two centuries this is a remarkable statistic in my opinion. See the CoTD here and email firstname.lastname@example.org if you want to get on the daily run.
A reminder also that I published a note on the historic relationship between yields and credit spreads late last week. Basically real yields are more important than nominal and it’s interesting that spreads started drifting this year when real yields started spiking higher from mid-February. See the report here.
The week in Asia has started off on a weaker footing even after a strong start and the fact that US equities (S&P 500 +1.95%) surged on Friday immediately after European markets closed. At that point they were down c.-1%. So a stunning late swing. As we keep on saying it’s a constant push and pull at the moment between epic stimulus/liquidity and fears over rates and inflation. Given this is all happening before most Western economies have even opened up then it’s highly likely we’ll be in this high vol pattern for sometime.
As we type the Nikkei (-0.56%), Hang Seng (-1.53%), Shanghai Comp (-1.23%) and Kospi (-0.99%) are all lower. Futures on the S&P 500 are down -0.35% while those on the Nasdaq are down a greater -1.03%. European futures are pointing to a positive open though as markets on this side of the pond try to catch up with late rally in the US on Friday. Turning to sovereign yields, those on 10y USTs are up +1.5bps to 1.583% but those on Australia (-6.1bps) and New Zealand’s (-4.3bps) 10yrs are down as they are reversing Friday’s move higher after the yield on 10y USTs ended the day largely unchanged. Elsewhere, both WTI ($67.46) and Brent ($70.79) oil prices are up by +2.06% after Saudi Arabia reported an attack on the world’s largest crude terminal although output seems to be unaffected. Brent and WTI are now trading at their highest level since October 2018. It seems that the rise in oil prices and high headline US stimulus number might be stoking some inflation concerns in the Asian session this morning.
In terms of data releases, over the weekend we saw China’s YtD Feb trade data. Exports were up +60.1% yoy (vs.+40.0% yoy expected) while imports stood at +22.2% yoy (vs. +16.0% yoy) bringing the trade balance to $103.25bn (vs. $59.0bn expected). It should be noted that last year China went into a very stringent lockdown in late January 2020 and as a result yoy growth is on a lower base.
The initial positive momentum in Asia was enhanced by the news on Saturday that the Senate has passed Biden’s $1.9tn stimulus bill. However we quickly saw concerns come back over yields and the further oil rise hasn’t helped. The Bill now returns back to the House tomorrow for a final vote before it can be sent back to the President to sign into law. At every step the market keeps on expecting the package to be watered down but it looks set to be every bit as large as Biden originally laid out. If it does make it through the House relatively unscathed then you may see another round of US growth upgrades and probably more concerns about yields and inflation. The battle royale will continue. I spoke with Brett Ryan from our US economics team over the weekend about the size of the package. They had recently factored in $1.6-1.7tn. He pointed out that around $200bn of the cost comes in the 2023-2026 period so the nearer term assumptions won’t be much different from the above consensus numbers outlined in their last update here.
Looking forward now, the highlights this week will be US CPI (Wednesday) and PPI (Friday), the ECB meeting on Thursday and given the pretty sizeable volatility in US rates at the moment the success of a $58bn 3yr auction (tomorrow) and a $38bn 10yr auction (Wednesday) will also be very important. Remember the Fed are now in their blackout period ahead of next week’s FOMC. So there won’t be much support or market damage from them this week.
With regards to the ECB meeting the focus will be all about whether the council feel that the recent rise in bond yields is proportional to the improving global economic prospects or an unwelcoming tightening of financial conditions. Our economists expect them to emphasise their commitment to preserving favourable financing conditions, which encompasses sovereign yields, and its willingness to use the PEPP’s capacity and flexibility. See their preview here for more.
In terms of other releases to look out for this week, there will be industrial production numbers from the Euro Area and its major economies, a final reading of Euro Area GDP, along with February’s preliminary University of Michigan sentiment indicator for the US on Friday. See the day by day week ahead for more at the very end as usual
Finally, earnings season grinds to a crawl with just 3 companies from the S&P 500 and 50 STOXX 600 companies announcing results. The main highlights to look for are Deutsche Post and Continental tomorrow, while Wednesday brings releases from Adidas, Campbell Soup, Oracle, and Industria de Diseno Textil. On Thursday, the market will get results from Assicurazioni Generali, Ulta and then EssilorLuxottica on Friday.
Back to last week and a recap now. All attention was on the continued selloff in US rates which continued to shake equity prices, particularly those of high-growth tech companies. US 10yr yields finished the week nearly +106bps above their record lows from early-August and have now risen above their pre-pandemic lows in 2019. They climbed +16.1bps on the week to 1.566%, their highest level since February of last year and the fifth straight weekly rise in yields. The last time bond sold off for five weeks in a row was January 2018. The move in rates was driven by both inflation expectations (10yr breakevens rose +8.6bps) and real rates (+7.5bps). The move at the long end of the curve saw the 2y10y yield curve steepen another +15.1bps to 142.3bps, the steepest since November 2015. Bond yields elsewhere fell back some with 10Yr Bund yields decreasing -4.2bps to -0.30%, 10yr Gilt yields dropped -6.4bps to 0.76%, and OATs were -3.7bps lower at -0.48%. Some of this differential was due to a late rally in the US the previous Friday that didn’t get factored in to European yields until Monday morning.
The S&P 500 looked set to end the week lower before Friday’s +1.95% rally, which caused the index to finish +0.81% higher on the week. The index was bolstered by cyclicals such as bank (+4.06%) and energy (+9.97%) stocks, the former rallied on higher interest rates and the latter on stronger oil prices. Brent crude rose +4.88% to finish just short of $70/bbl and WTI gained +7.46% to over $66/bbl – the highest closing level since April 2019 – on the back of OPEC+ agreeing to postpone increasing supply for a few months. Tech stocks were the big loser as the NASDAQ was down -2.06% over the course of the week, even as the index rose +1.55% on Friday as equites tried to bounce back. European banks gained +3.76% which helped the STOXX 600 to finish the week up +0.91% (-0.78% Friday before the late US rally) with the French CAC (+1.39%) and FTSE 100 (+2.27%) notably outperforming.
In terms of data from Friday the highlight was the US jobs report for February, which showed nonfarm payrolls increase by far more than expected at +379k (vs. +200k est). This took the headline unemployment rate down to 6.2%, though earlier in the week Fed Chair Powell cautioned that getting the participation rate back up will be just as important to the labour market recovery. The strength of the report saw US rates remain elevated even if we closed c.6bps lower than the peaks post the number. Elsewhere German January factory orders rose +1.4% MoM (vs. +0.5% est.) following December’s -2.2% decline – the first decline since April 2020. On the other hand, Italian retail sales for January fell -3.0% (vs. -0.5% est.) fell -6.8% on a YoY basis.