Stocks Consolidate Ahead of Trump Speech to Congress

European shares are mixed as yields are slightly higher with Treasuries and Bunds modestly lower while Asian sovereigns and European peripherals are slightly higher. Trading was cautious ahead of President Trump’s State of the Union Tuesday. Stocks are mixed too with Japan’s Nikkei leading the decliners with a near 1% tumble as JPY rose on risk aversion. U.S. equity futures are nearly unchanged, in line with the FTSE and the DAX. The former is higher as Sterling retreats on reports there could be a second Scottish independence vote could be held as soon as next month after the government triggers Article on Brexit. Data on EMU confidence wasn’t as firm as expected.

Scotland may be headed for a second referendum on independence as soon as next month, per a report in the London Times, which is behind the early selling of the pound, per market contacts. The vote would be timed with the expected triggering of Article 50, and is a contingency, per the article, that the government is preparing for, though it would risk a constitutional crisis if it attempted to block it. Scotland voted overwhelmingly to remain part for the EU in last year’s referendum, and the Scottish National Party has since been threatening a new referendum in the event of a hard Brexit.

Eurozone M3 Saw a Decelerating in Growth

Eurozone M3 growth decelerated to 4.9% year over year from 5.0% year over year in the previous month. Loan growth was mixed, with the growth rate for loans to non-financial corporations falling to 1.7% from 1.9%, while lending to households accelerated to 2.4% year over year from 2.2% year over year as consumer credit growth rose to 4.1% year over year from 3.9% year over year. Lending for house purchases meanwhile remained steady at 2.7% year over year.

EMU ESI economic confidence edged higher climbing to 108.0 in February from 107.9 in the previous month a tad weaker than hoped as the dip in consumer confidence managed to counterbalance the clear improvements in services and industrial confidence. It seems things are improving and are in fact looking better than expected at company level, which is also boosting job creation, but consumer confidence readings are impacted by the negative political headlines that are dominating the news, so that uncertainty is weighing on confidence even if things are going well at a personal level. French national business confidence data also reflected that split.