Good morning,
 
Yesterday US equity markets rallied throughout the session with the S&P 500 closing just under all time highs. The rally came in two waves - first as investors went through the details of the PPI report which suggested there would be some moderation in the annual PCE readings out in a couple of weeks which helped Treasury yields reverse all of the post-CPI move higher. Markets extended gains in the afternoon after President Trump held a press conference to announce that he had tasked the USTR and Commerce Secretary Lutnick with executing reciprocal tariffs that would take into account value added-tax regimes and other non-tariffs barriers. This will be done on a country-by-country basis with Mr. Lutnick targeting April 1 ^st for implementation. The fact that the tariffs were not immediately put in place, leaving room for negotiation, was viewed positively by markets.
 
The response was more mixed across global markets overnight. The big standout on the upside continued to be the Hong Kong Hang Seng index up nearly 4% bringing WTD gains to 7% with the continued AI optimism, BABA/KWEB are up +>5% in the pre-market. European indices which have outperformed this week partially driven by hope of a Ukraine resolution are trading on either side of unchanged. US futures have also traded on either side of unchanged overnight extending to the upside during Asian trading hours only to pull back as European markets opened. This morning’s retail sales report came in well below expectations though there were positive revisions to the previous month.  Headline retail sales were down 0.9% with ex-autos -0.4%. The control group which feeds into GDP was also down -0.8% below the 0.3% estimate. Like all of the data recently markets seem to be rationalizing the weakness pointing to revisions, severe weather, a holiday hangover and wildfires for the weakness.
 
Equity futures have ticked slightly higher since the report with S&P futures only a touch lower while the Russell 2k is up 0.3%. However there has been a much more significant move lower in Treasury yields which are down 4-7bps across the curve. The 10yr is down 7bps to 4.47% back below the closely watched 4.5%. The USD is down ~0.6% breaking below the January lows currently trading ~$106.50, if this continues this could be an earnings tailwind going forward reversing some of the Q4 drag.  Industrial production and capacity utilization were just released coming in slightly ahead of expectations.
 
Commodities are mixed. ICE Brent is up ~0.5% to $75.40 reversing some of this week’s weakness. Metals were extending to the upside overnight but have reversed. Gold is modestly lower while copper is now down ~1.5%. Ag is mostly higher. Bitcoin is slightly higher continuing to chop around in the mid-90ks just below its 50d ma.
 
There were mixed earnings overnight. 13fs will be coming out throughout the day.
 
Earnings:
After-Market: AEE, AL, AMAT, BIO, COIN, DKNG, DLR, DXCM, GDDY, IR, KN, PDFS, ROKU, RSG, TWLO, WYNN
Pre-Market: MRNA, POR, SXT, THS
 
Global Markets
Asia:
Japan's Nikkei: -0.8% (+0.9% for the week)
Hong Kong's Hang Seng: +3.7% (+7.0% for the week)
China's Shanghai Composite: +0.4% (+1.3% for the week)
India's Sensex: -0.3% (-2.5% for the week)
South Korea's Kospi: +0.3% (+2.7% for the week)
Australia's ASX All Ordinaries: +0.2% (+0.5% for the week)
 
Europe:
STOXX Europe 600: +0.2% (+2.2% week-to-date)
Germany's DAX: -0.3% (+3.5% week-to-date)
U.K.'s FTSE 100: -0.1% (+0.6% week-to-date)
France's CAC 40: +0.4% (+2.8% week-to-date)
Italy's FTSE MIB: +0.6% (+2.9% week-to-date)
Spain's IBEX 35: +0.2% (+2.1% week-to-date)
 
Sectors/Other Asset Classes:
Government Yields

• US 2yr -6bps to 4.26%, 5yr -7bps to 4.32%, 10yr -6bps to 4.47%, 30yr -5bps to 4.69%
• USD index: -$0.63 to $106.59
• Oil prices - ICE Brent: +0.4% to $75.30, WTI: +0.2% to $71.46, Nat Gas: +1.9% to $3.70
• Gold: -0.3% to $2,936.20, Silver: +2.5% to $33.54, Copper: -1.6% to $4.70
• Wheat: +2.0% to $6.10, Corn: +0.7% to $4.97, Soybeans: +0.7% to $10.38, Cotton: +0.7% to $0.68
• VIX: +0.02 to 15.12
• Bitcoin: +0.4% to ~96.9k

Economic Data:

• US:
  • Retail Sales/ex-autos: -0.9%/-0.4% vs. -0.1%/0.3% cons., prior revised to 0.7%/0.7% from 0.4%/0.4%
  • Retail Sales Control Group: -0.8% vs. 0.3% cons., prior revised to 0.8% from 0.7%
  • Import prices: 0.3%/1.9%vs. 0.4% cons., prior 0.1%/2.2%
  • Export prices: 1.3%/2.7% vs. 0.3% cons., prior 0.3%/1.8%
  • Industrial production: 0.5% vs. 0.3% cons., prior 0.9%
  • Capacity Utilization: 77.8%vs. 77.7% cons., prior 77.6%
• Global
  • China Loan growth: 7.5% vs. 7.3% cons., prior 7.6%
  • India Inflation: 2.3% vs. 2.5% cons., prior 2.4%
  • Germany PPI: -0.2% vs. -0.2% cons,. prior 0.7%
  • EU GDP (revision): 0.1% prior 0%