US consumer confidence declines sharply in February

The US Conference Board measure of consumer confidence fell sharply in February, to reach a value of 98.3 from 105.3 the month prior. The outturn was also below consensus expectations. The fall in the headline measure was driven by declines in both the current conditions and expectations components, with declines across age and income groups. Consumers appear to be becoming more pessimistic about both current and future labour market conditions, while the proportion of respondents expecting a recession over the course of the next year rose to a 9-month high.

The final estimate of fourth quarter German GDP remained unchanged from its earlier print, contracting 0.2% q/q. A marginal rise in consumer spending (0.1% q/q) was insufficient to offset a material slide in net exports in Q4 2024, with weak demand from Chinese consumers hampering manufacturing activity.

Today’s Economic Data and Events

No key data releases

Fixed Income

• US treasury yields dropped sharply on Tuesday, with weaker than expected consumer confidence driving concerns about a deteriorating outlook for the US economy. The 2yr yield dropped 8bps to 4.0942%, while the 10yr yield fell almost 11bps to reach 4.2945%.
• Yields on major European bond were also lower on the day. The 10yr Gilt yield fell by 5.5bps to 4.507%, and the 10yr Bund dropped almost 2bps to 2.455%.

• The debut sale of a 7-year green Euro-denominated bond by Saudi Arabia raised €1.5bn, while a further €750m was raised from the sale a conventional 12-year bond.

FX

• The dollar spot index fell 0.27% on Tuesday, as the Conference Board consumer sentiment survey showed weakening confidence. EURUSD rose 0.44% to 1.0514, and GBPUSD gained 0.32% to reach 1.2666. USDJPY fell 0.46% to 149.03, driven by safe haven demand and expectations that the BoJ will hike rates.
• Commodity currencies declined against the dollar on the day. AUDUSD fell 0.1% to 0.6344 and NZDUSD fell 0.12% to reach 0.5726. USDCAD gained 0.37% to 1.4313, as President Trump reiterated plans the impose tariffs on Canada over border security concerns.

Equities

• Growing concerns about the outlook for the US economy resulted in further falls in several US equity indices. The NASDAQ fell for a fourth consecutive day, declining 1.35%, while the S&P 500 dropped to a five-week low, declining by 0.5%. The Dow Jones rose by 0.37%.
• In Europe, the Eurostoxx 50 dropped 0.11%, the CAC 40 fell 0.5% and the DAX declined 0.07%. The FTSE 100 gained 0.11%.
• Locally, the DFM closed 0.14% higher and the ADX gained 0.4%. The Tadawul declined by 0.15% on the day.

Commodities

• Oil futures fell sharply on Tuesday. Brent dropped 2.35% to reach USD 73.02/b, and WTI fell 2.5% to USD 68.93/b. Prices have risen somewhat in early morning trade.