Today, Stock Futures pared gains on disappointment that President Donald Trump did not offer further details on his plans for infrastructure spending and tax reforms, but the Dollar firmed on growing expectations of a rate hike this month. Trump pledged to repair the immigration system, improve jobs and wages for Americans and promised “massive” tax relief to the middle class and tax cuts for companies, offering few clues on how they would be achieved.
US Stock Futures still pointed to a higher open after Trump’s address, though gains shortened as the speech progressed. E-mini S&P Futures edged up 0.2%, after the Dow Jones Industrial Average snapped a 12-day winning streak to close down at 0.1% in the prior session. The Dollar index, which tracks the greenback against a basket of trade-weighted peers, advanced almost 0.4% to 101.49 after shaking during the speech. The US currency also rebounded against the Yen, rising at 0.35% to 113.16 Yen, after earlier erasing its gains.
Reactions in Asian Stock markets to Trump’s speech were also largely muted, with the MSCI’s broadest index of Asia-Pacific Shares outside Japan down about 0.2%. A raft of surveys according to Thomson Reuters, pointing to stronger factory activity in China, Japan and other parts of the region were largely overshadowed by Trump’s speech. Chinese Stocks advanced 0.4% after the stronger-than expected factory readings.
Japan’s Nikkei jumped by 1.1% sustained by a weaker Yen and data showing manufacturing activity expanded in February at the fastest pace in almost three years.
Treasury Yields remained near that level after Trump’s speech. US 2-year Treasury Yields were at 1.2999 after the speech, after touching 1.304, their highest level since December 15, earlier in the session. US 10-year Treasury Yields rose to 2.4221, after touching a session high of 2.4260 during the night.
According to CME Group’s FedWatch tool, traders now see a better than 62% chance of a rate increase in March from the current level of 0.5 to 0.75%, a surge from 31% earlier.