One of the quietest days in a while with even the JPY trading in a fairly tight trading range, less than one Yen (113.00 – 113.80). Early talk surrounded Fed’s Member (Patrick Harker) who commented late in the day that March is still in play for potential move. US Dollar bulls needed no encouragement and soon saw the DXY pushing against recent highs. The Nikkei liked the Yen weakness responding with Exporters making ground. Nikkei closed the day up 0.7% and in late US trading has pushed slightly further north. Shanghai also closed marginally better up 0.4% following the stock enthusiasm. It was not the same story for the large caps on the Hang Seng however and especially for banks. HSBC reported 2016 profits fell 62% to $7.1bn, taking large one-time hits and blaming slowing economies for its two main markets, the UK and Hong Kong. A quick word on BHP (stock in Australia) +1% today but continuing a very successful run up of nearly 70% in the past 12 months trading, all helping the ASX make-back ground in an attempt to revisit the 2015 highs.

European bourses were strong across the board today but probably driven by the weakness of the Euro rather than anything else. Obviously, the comments overnight helped the dollar, but more geo-political concerns continue to unsettle markets. The Le Pen vote is worrying markets with many stating a victory would spell the end of the EU project and there is also talk that such a vote would be hugely beneficial for the DAX . Economic data was good with stronger numbers for French and German PMI. In the UK, the BOE governor addressed the Treasury Select Committee saying they are unlikely to spot the next financial crisis, with Mr. Gertjan Vlieghe stating. “As our models are just not that good”! Let’s hope the UK has saved some money from not spending to build a model so that they can pay Jean-Claude Juncker’s bill when it arrives.

US markets reopened today after the long weekend and were strong from the word go. All three leading indices made new highs then took a breather for much of the day. Towards the close we rallied again, but this time as oil rallied (+1.2%) and Treasuries had topped out. The rally continues to be led by Retailers, Food companies, Technology and interesting to look back and see the volume of buy-backs over the past few years. Many companies (Home Depot, IBM, Travellers) have all bought a huge amount of outstanding stock back over the past 10 years. All core indices closed near their highs both for the day but also on record. Watch currencies tomorrow and we see more Euro weakness then probably expect the same game tomorrow.

Interesting price action in bond markets today with UK and US issuing more paper. In the UK we saw a syndicated £4.5bn Inflation (Adjusted) Linker that averaged -1.56%; the deal had a bid/cover x2.5. In the US we saw a mixed response to the 2yr note at 1.23% with a 2.8 Bid to cover. Bonds lost ground in the final hour as 30’s came under a little selling pressure. 2’s closed 1.21% (+2bp) and 10’s 2.43% (+3bp). Bunds closed 0.30% (+1bp) which closes the US/Germany spread at +213bp. Italy 10’s 2.22% (+6bp), Greece 6.99% (-28bp), Turkey 10.55% (-1bp), France 1.08% (+3bp), Portugal 3.97% (+3bp) and Gilts unchanged at 1.23%. France Germany spread is the widest we have seen in many years (+78bp).