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Resurfacing geopolitical risks weighed heavily on risk sentiment after U.S. President Trump talked about reinstating sanctions on Iran. On Wall Street, another slump in the tech sector dragged equity indices significantly lower.

  • U.S. HPI up 0.6% vs. 0.5% consensus in Feb, earlier reading upgraded to 0.9%
  • U.S. S&P/CS Composite-20 HPI up 6.8% y/y in Feb
  • U.S. CB consumer confidence index rose from 127.0 to 128.7 vs. 126.0 consensus
  • U.S. new home sales rose from 667K to 694K vs. 625K forecast
  • Richmond manufacturing index slipped from 15 to -3 vs. forecast at 16
  • Trump: Trade with France is complicated because of EU barriers
  • Trump: Iran deal “terrible”, “should have never been made”

Major Events/Reports:

Mostly upbeat U.S. data

Uncle Sam released another batch of mostly stronger than expected medium-tier reports, keeping U.S. bond yields and the dollar supported.

In the housing market, both the FHFA and S&P/CS HPI beat expectations, with the former posting a 0.6% gain for February and the latter up by 6.8% year-over-year in the same month. Analysts had expected a 0.5% increase and a 6.3% reading, respectively.

Earlier figures also enjoyed upgrades, with Seattle, Las Vegas, and San Francisco reporting the largest gains. New home sales climbed from 667K to 694K instead of falling to 625K.

Consumer optimism was also reported, as the CB consumer confidence index for the current month advanced from 127.0 to 128.7 instead of falling to 126.0. Respondents had a more optimistic assessment of current conditions and outlook as business activity and the labor market saw improvements.

However, the Richmond manufacturing index posted a surprise decline from 15 to -3 to reflect a contraction in the industry compared to the estimated 16 figure.

Risk-off flows return on geopolitical risks

After his meeting with French President Macron, U.S. President Trump had some tough words to say on the Iran deal and EU trade. In his speech, he talked about how the Iran deal was “terrible” and “should have never been made.”

Then again, he offered some reassurances to Macron that new solutions could be made and that he is willing to compromise, citing:

“We could have at least an agreement among ourselves fairly quickly. I think we’re fairly close to understanding each other. And I think our meeting, our one-on-one went very, very well.”

Still, these weren’t enough to ease concerns that the U.S. could be prepping to pull out of the deal by May 12. On a less downbeat note, Trump also mentioned that a NAFTA deal could be in the works.

This failed to buoy stocks higher, though, as a sharp drop in FAANG on weaker earnings came into play:

  • Dow 30 index is down 449.90 points to 23,998.79 (-1.84%)
  • S&P 500 index is down 39.04 points to 2,631.37 (-1.46%)
  • Nasdaq is down 125.29 points to 7,002.88 (-1.78%)

Bond yields posted strong gains while crude oil retreated on talk of reinstating Iran sanctions:

  • U.S. 30-year yield is up to 3.177% (+1.07%)
  • U.S. 10-year yield is up to 2.992% (+0.70%)
  • U.S. 5-year yield is up to 2.821% (+0.07%)
  • WTI crude oil is down is down to $67.86 per barrel (-0.80%)
  • Brent crude oil dipped to $73.97 per barrel (-0.99%)

Major Market Mover(s):

NZD

The Kiwi returned most of its gains from earlier in the day as risk-off flows returned.

NZD/CAD slipped 51 pips to .9135 (-0.56%), NZD/JPY tumbled 33 pips to 77.38 (-0.61%), NZD/CHF slumped below the .7000 handle (-0.39%), and GBP/NZD is up to 1.9619 (+0.67%)

EUR & GBP

The euro and pound held on to their gains, rallying against commodity currencies and even the lower-yielding yen.

EUR/NZD is up to 1.7178 (+0.57%), EUR/CHF advanced to 1.1974 (+0.28%), GBP/AUD is up to 1.8383 (+0.29%), GBP/USD is up to 1.3977 (+0.26%), and GBP/JPY is up to 151.89 (+0.24%)

Watch Out For:

  • Banks in Australia and New Zealand closed for the Anzac Day holiday
  • 5:30 am GMT: Japanese all industries activity index (0.4% expected, -1.8% previous)