Inflation, Bitcoin and Banks in the Leap Day Spotlight

As the last day of an extended February gets underway, US index futures have erased losses of around 0.3% from early morning trading in the last few minutes and are currently trading flat to up 0.25% following the release of US inflation data. Core PCE inflation, the Fed’s preferred measure declined slightly in line with expectations (2.8% vs previous 2.9%). Inflation numbers from Germany, France and Spain showed inflation pressures easing but generally not as much as traders had hoped.

Other economic reports out so far today have been positive. Canada managed to avoid a recession with a more positive than expected Q4 GDP print (1.0% vs street 0.8% and Q3 -0.5%), easing pressure on the Bank of Canada to cut rates ahead of next week’s meeting. US personal income increased more than expected (1.09% vs street 0.4%) but weekly initial jobless claims were worse than expected (215K vs street 210K).

Later today, three Fed officials are speaking. Chicago PMI (street 48.0) is due at 9:45 am EST, followed by US pending home sales at 10:00 am. Tomorrow brings Manufacturing PMI reports from around the world and US construction spending.

Cryptocurrencies appear to be one of the few trading games left in town this week and they have continued to soar overnight. Bitcoin traded up above $64,000 overnight, near an all-time high and has dropped back closer to $62,500 up about 3.3% while Ethereum is up 5.5%. Gold and the major paper currencies, in contrast, are pretty much flat, as are both US Crude Oil and Copper.

Earnings week for the big Canadian banks wraps up today with TD Bank ($2.00 vs street $1.93) and CIBC ($1.81 vs street $1.66) beating expectations. Laurentian Bank’s results, however, were disappointing ($0.91 vs street $0.95). Banks earnings wrap up tomorrow with results from Canadian Western Bank. Later today, numbers are due from Canadian Natural Resources and MEG Energy. Crescent Point Energy reported strong results this morning ($1.70 vs street $0.41).

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