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Contact UsAFS Markets Blog: morning 03/02/2026
AFS morning commentary
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- Meanwhile in markets, equities are up as dip-buyers emerged in precious metals – with some success;
- Gold is now eleven percent of the lows in a move that haters will obviously call a dead-cat bounce. Silver is up no less than twenty percent off yesterday’s low. I wouldn’t even try to attribute the moves to anything fundamental – the market is driven by price, momentum and price and technical charts;
- Asian equities are in the green this morning, with an outsized gain of nearly four percent for the Nikkei, expanding the YTD gain to almost nine percent. S&P 500 futures are up and pointing to a record close for the index;
- While US Treasury and Bund yields have shown some volatility this year, the bond market has yet to make a major move in one direction or the other. Yes, 10y and 30y Bund and UST yields are at the high end of their recent trading ranges. But we haven’t seen a blowout in yields that so often happens at the start of the year;
- There is some good news for the AI boom/bubble. Oracle, on the forefront of the AI (over-)investment wave, managed to sell $25 billion in debt without much ado. The issuance was oversubscribed (record demand Bloomberg blares) after the company announced an equity raise of about $25 billion. In the wake of the issuance, Oracle’s senior CDS spread is down sharply, though it remains elevated. Note that our AI index is just several percent below last year’s ATH while the Mag7 are loitering very close to the ATH;
- Elsewhere, the broad dollar has given up some of the Warsh-driven gains. That is: the recovery in the greenback following the news that President Trump has chosen Warsh as his/the next Fed Chairman. Meanwhile, USDJPY has rebounded from 152 to 155 on the back of jawboning by Japan’s Prime Minister Takaichi. Mind you that Takaichi talked down the yen yesterday even though we’re not that far below levels that triggered intervention talk the other way around (i.e. trying to prop up the yen);
- In overnight news, France has finally closed the budget saga after Prime Minister Lecornu survived no less than two no confidence votes on Monday. In exchange for support for the budget from the socialists, Lecornu was forced to water down austerity measures to about half a percent of GDP from a full percent of GDP. Regardless, OATs have rallied hard, with the 10y Bund spread at 58bps, down almost 30bps from last year’s high. For the record: France now trades slightly tighter than Italy for the 10y, but with the disclaimer that I am using Bloomberg generic pricing;
- In other news, President Trump announced a tariff deal with India. In exchange for New Delhi scaling back purchases of Russian crude, the US will cut India’s tariff rate to 18% from 25%. Trump, who was full of superlatives about Prime Minister Modi, also spoke of the Indians lowering tariffs on US goods to zero and removing all non-tariff barriers. On the surface, the US got a better deal than the EU did with the Indians last week. The Europeans will still face tariffs of about ten percent;
- Because of the partial US government shutdown, this week’s main event – US monthly labor market data – has been delayed until further notice. To make matters worse, the Bureau of Labor Statistics will be once again forced to stop data collection because of the lack of funding. In any case, Trump has managed to strike a bipartisan funding deal with Congress which could be voted on as soon as today. According to reports, Republican holdouts against the deal have started to waiver;
- Looking ahead, the main event today is the ECB’s quarterly Bank Lending Survey, which should point to modest growth in bank loan demand if recent bank balance sheet data is any guide. The prior survey was quite bearish in the sense that banks unexpectedly tightened credit standards;
- We had the US job openings and labor turnover survey on tap for this afternoon, but that report is also delayed until further notice.
