Good morning,

More and more jaw and jaw

Another day and we have yet to see any member of the Federal Reserve meaningfully push back on the increased sentiment that a rate rise is coming in March. Loretta Mester and John Williams were the 5th and 6th Fed members to speak this week and neither were able to offer anything to suggest that rate rises in the US in the short term are not forthcoming.

5 more Fed speakers take to the stage today in a dedicated effort to communicate policy from seemingly every angle of the rate-setting Federal Open Markets Committee. Members Evans, Lacker and Powell will be joined by Fed Chair Yellen and Vice Chair Fischer in speaking later on this afternoon.

Is there anything that can dissuade them?

Save a disastrous collapse in jobs or wage growth as shown in next week’s Non-Farm Payrolls announcement or a substantial bout of risk off sentiment it seems that March is nailed on. At the moment, both of these concerns look to have been marginalised; yesterday’s outstanding initial jobless claims numbers that showed a new record low in the amount of Americans filing for unemployment benefits should lift the numbers of jobs created and their wages.

Similarly risk sentiment seems relatively benign at the moment. These speeches by Fed members are very obvious test balloons to ascertain the likelihood of a market panic in response to higher borrowing costs and yet we have not seen anything like that with equities remaining close to record highs, bond yields behaving themselves and the world’s business media setting up shop to watch the stock market debut of Snapchat.

Until Fed Chair Yellen and Vice Chair Fischer speak it is a rather easy bet to suggest markets may be reticent to do anything. Fischer speaks at 17.30 GMT with Janet Yellen at 18.00.

Services growth set to slow further

It is all about the services industries today. The UK services PMI is due at 09.30 with Italy’s number due at 08.45, France at 08.50, Germany at 08.55, and the Eurozone wide measure at 09.00 with the US’s at 15.00.

January’s number showed that it was increased costs and compressed margins that were the main dangers to the sector and will be crucial, alongside private consumption, as a gauge of just how well the UK economy is doing. It is becoming ever clearer that Brexit pressures are starting to bite.

Have a great day and a better weekend

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