Daily Market Outlook, February 27, 2023

Northern Ireland Protocol Deal Set To Be Announced

Asian equities have started the week with a cautious tone as markets eye month end flows, Wall Street witnessed a tough close to trading on Friday as hotter than expected US PCE data once again led investors to reprice US interest rates sparking further hawkish terminal rate expectations. As European bourses are set to open, reports out of the UK suggest that the UK PM Sunak and Eurozone counterpart Von Der Leyan are poised to announce that a long awaited deal on the Northern Ireland protocol has been reached, reconciling trading arrangements in Northern Ireland, which is providing some much needed support for risk appetite as trading gets underway for the week.

For the day ahead the lack of tier one data from the European session, with only Eurozone sector confidence indicators due for release, as such investors will be focused on central bank speakers on deck today, including ECB’s Lane and de Cos and the Bank of England’s Broadbent. Broadbent is providing opening remarks at the BoE’s conference on “New Digital Technologies and the Future Financial Landscape” and so may give much insight into the UK monetary policy outlook. With bond markets pricing in a further 125bp of interest rate hikes from the ECB, its officials may provide some additional clues into how likely this is. In the US, January durable goods data is due to be reported with the Fed’s Jefferson set to speak on the US inflation outlook. Data wise investors will be looking to the week ahead for directional catalysts with BoJ nominee Governor Ueda hearings in Japan, China PMI data, Eurozone inflation data,the ECB minutes and US ISM metrics all set for release.

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