U.S. Market Update

Dow -30 S&P -0.6 NASDAQ -8.4

The new week is offering the same old story for financial markets. The greenback remained under pressure in early trading while commodities made another run at historic highs. April crude traded above its all-time inflation adjusted high of 10.376 early in the NY session. Indices continue to head lower after overseas markets slid, led by a 4% drop in the Nikkei. The XLF is down another 2% now a little more than a dollar from the January lows. Airline stocks are losing altitude for the fifth straight session. Equity futures did catch a bit of a bid after December ISM data met expectations, albeit at a five-year low. Metals futures are up another 1-2%, but they have backed off new all-time highs after the Dollar found a little traction following comments from several European government officials. April gold briefly traded above $990. Metal and Mining names continue to move higher. FCX +3% PCU +2.3% AA +2% NEM +2.7% Treasury prices are modestly lower with the long bond future off half a point yielding 4.44%.

Some comments from European officials helped to take the USD off its all-time lows against the Euro and the Swiss Franc pairs. The EU's Juncker made the strongest statement that he was increasingly concerned about high Euro levels. EUR/USD tested 1.5275 just prior to Juncker's comments, while USD/CHF probed the 1.03 area. The Dutch Finance Minister Bos later joined the chorus noting that the strong Euro does not reflect economic fundamentals. The ECB's Trichet reiterated that the US has affirmed its desire for a strong USD policy. Prior to this verbal intervention, the theme of higher commodity prices and weaker USD as NYMEX oil and spot gold hit fresh all-time highs of $103.96 and $989.55 respectively. Carrry-related currency pairs were off the opening lows seen in Sydney and Tokyo as risk aversion themes continued to impact the JPY and CHF crosses. The USD/JPY tested three-year lows at 102.60 before rebounding towards the mid 103 area. European fixed-income retraced its earlier gains after the Feb ISM manufacturing data managed to meet market expectations. March Bund is up 10 ticks at 117.16, Mach Gilt is up 1 tick at 110.45 European equities are in the upper end of their session trading range, aided by the post ISM equity rally. Euro-Stoxx 50 -1.35 at 3,647; FTSE -0.6% at 5,846; CAC-40 down 0.9% at 4,747, DAX at 6,677 -1% for the session.

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