US Closing Report (by Sigma Squawk)
Investors were spooked after US President Trump tweeted a warning to Russia that Syrian airstrikes were imminent, adding that relations between the US and Russia are worse than ever before. This was followed by news that two missiles had been intercepted over the Saudi capital.
Perceived safe-haven assets have rallied in response with US Treasuries, the Japanese Yen and gold all in the green. Oil prices have also been boosted with US crude futures touching their highest level since December 2014 before settling at $66.82 (+$1.31).
Elsewhere, the Dollar climbed after the releases of the FOMC minutes in which many participants stated that recent readings on inflation increased their confidence that inflation would rise to the 2% objective in coming months and then stabilize around that level.
* Officials said Italian Northern League leader Salvini may be asked to form a government next week.
* US Defence Secretary Mattis said they are still assessing the intelligence on the Syrian chemical attack. He added that the US military stands ready to provide options on Syrian military strikes if appropriate and as the President determines.
* Satellite photos are said to show Russian warships leaving Syrian waters. Russian lawmakers also confirmed Moscow are in direct contact with US military staff for Syria.
* US sells $21.0 Bln of 10-Year Notes:
– Bid to Cover: 2.46, previous 2.50
– Indirect Bidders: 53.2%, previous 66.2%
– Direct Bidders: 8.4%, previous 6.5%
– Yield: 2.795% (WI: 2.791%)
* FOMC Minutes (Mar 20th-21st)
– Almost all participants expressed the view that it would be appropriate for the Committee to raise the target range for the federal funds rate 25 basis points in March.
– A couple of participants pointed to possible benefits of postponing an increase in the target range for the federal funds rate until a subsequent meeting.
– Many participants stated that recent readings from indicators on inflation and inflation expectations increased their confidence that inflation would rise to the Committee’s 2 percent objective in coming months and then stabilize around that level; others suggested that downside risks to inflation were subsiding.
– All members viewed the recent data and other developments bearing on real economic activity as suggesting that the outlook for the economy beyond the current quarter had strengthened in recent months. In addition, notwithstanding increased market volatility over the intermeeting period, financial conditions had stayed accommodative, and developments since the January meeting had indicated that fiscal policy was likely to provide greater impetus to the economy over the next few years than members had previously thought.
– Several participants expressed the judgment that it would likely become appropriate at some point for the Committee to set the federal funds rate above its longer-run normal value for a time.
– Some participants suggested that, at some point, it might become necessary to revise statement language to acknowledge that, in pursuit of the Committee’s statutory mandate and consistent with the median of participants’ policy rate projections in the SEP, monetary policy eventually would likely gradually move from an accommodative stance to being a neutral or restraining factor for economic activity.
* US Monthly Budget Statement (Mar) -$209.0 Bln versus -$191.0 Bln expected, previous -$215.0 Bln.
* Theresa May ‘to act on Syria without MPs’ vote’ – sources (BBC).
– Theresa May looks ready to join military action against the Assad regime in Syria without first seeking Parliamentary consent, well-placed sources have told the BBC.
* US crude futures settled at $66.82 (+$1.31) | Brent crude futures settled at $72.06 (+$1.02).
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