07 March 2023
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US factory orders decline in January

By Jeanne Walters

US factory orders for manufactured goods fell -1.6% m/m in January, slightly better than consensus expectations for a -1.8% decline. The fall on the month was predominately due to fewer contracts for large Boeing passenger planes, which had buoyed the December figure. Excluding the volatile transportation sub-component, orders for manufactured goods rose 1.2% in January.   

Qatar’s S&P Global PMI survey rose to a six-month high of 51.9 in February, compared to 45.7 in January. The February print was the first expansionary reading for the index since September last year, as a period of correction from the extraordinary level of activity in the run-up to the FIFA World Cup prompted a run of sub-50 readings from October to January. Both output and new orders saw strong gains last month, while business optimism rose to a multi-year high.

The UK S&P Global/CIPS construction PMI jumped to 54.6 in February from 48.4 in January. The uptick in the headline was supported by a rebound in commercial work and civil engineering activity. Housing activity, in contrast, declined for a 3rd consecutive month.

The Reserve Bank of Australia hiked its cash target rate by 25bps this morning, taking the benchmark rate from 3.35% to 3.60%. The hike was well anticipated given that Australia’s CPI inflation rate remains elevated – while it slowed to 7.4% y/y in January, from 8.4% in December, it remains well above the bank’s target level , and the fact that inflation is increasingly driven by stickier service elements of the basket rather than the food and energy story of last year means that the central bank is more likely to look to dampen demand through higher rates. Indeed, the hiking is not over yet either with the governor Philip Lowe stressing that the bank will do whatever is necessary in order to bring price growth back down to more normal levels and cautioning that more rate hikes will be necessary.

Today’s Economic Data and Events

  • 11:00 German factory orders Feb: forecast -0.9%

Fixed Income

  • US Treasuries oscillated ahead of testimony from Fed Chair Jerome Powell later today and tomorrow. The 2yr UST had started the day on a stronger footing but pulled weaker over the US session with yields ending up 3bps higher at 4.8861%. On the 10yr yields settled at 3.9577%, unchanged on the day.
  • European bonds closed weaker following comments from Robert Holzmann, a governing council member and head of Austria’s central bank. Hozlmann supported four more 50bps hikes at the upcoming ECB meetings, helping to push the 2yr Schatz yield up 10bps to 3.29% while 10yr bund yields rose 3bps to 2.738%.


  • The stridently hawkish view from Robert Holzmann at the ECB helped EURUSD pull higher to start the trading week, with the pair up 0.4% overnight to 1.0681. The pair has moved off a recent floor at around 1.055 with levels around 1.07 the next resistance. GBPUSD showed little movement overnight, settling slightly lower at 1.2025. USDJPY was also nearly unchanged, trading at 135.93.
  • Commodity currencies edged weaker at the start of the week with USDCAD moving against the loonie, rising by 0.1% to 1.3613. AUDUSD showed more weakness, falling by 0.6% to 0.673 while NZDUSD fell 0.4% to 0.6197.


  • Following the rally seen at the close of last week, global equity markets got off to a more muted start to this week. Japan’s Nikkei was an outperformer as it added 1.1%, but the Hang Seng added just 0.2% while the Shanghai Composite closed 0.2% lower, with the muted official growth target of 5.0% in China in 2023 contributing to the sell-off.
  • In Europe, the CAC closed flat while the DAX added 0.5% and the FTSE 100 lost 0.2%. In the US it was a similarly mixed story as the NASDQW lost 0.1% while the S&P 500 and the Dow Jones both added 0.1%.
  • Locally, the DFM added 1.1% and the ADX gained 0.9%. In Saudi Arabia, the Tadawul closed up 0.4%.


  • Oil prices kept their winning edge intact overnight with both Brent and WTI futures gaining, extending their recent rally to five days in a row. Brent settled up 0.4% at USD 86.18/b while WTI added 1% to USD 80.46/b.
  • Time spreads in both Brent and WTI have quietly tightened in recent weeks. The backwardation in 1-2 month Brent futures rose to USD 0.56/b overnight, up from around USD 0.30/b where it had been trading last week, while the contango that persists in the WTI curve has narrowed to just USD 0.10/b, from closer to USD 0.30/b earlier in February.

Written By

Jeanne Walters Senior Economist

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