The Day Ahead: Inventories, Budget Statement, Treasury Auction

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Investors this morning await the first real data to be released this week. But wholesale trade inventories isn’t a major market mover, nor is the afternoon’s budget statement, so it could be a quiet day if investors prefer to postpone trading until retail sales figures hit the headlines on Friday.

One hour before the opening bell, the market is pretty flat. Dow futures are down 1 point at 10,563 and futures on the S&P 500 are up 0.00 points to 1,140.50

Meantime, WTI crude oil is up 31 cents to $81.80 per barrel, and Spot Gold is trading $5.15 higher at $1,127.00.

Earlier today the Mortgage Bankers Association said its index of mortgage application rose 0.5% in the first week of March, but it remains down 12.5% from last year.

Key Events Today:

10:00 ― Wholesale Trade Inventories are expected to increase by 0.2% in January, a fraction of the 0.8% decline seen in December. The expected gain would mark the third increase in four months, but prior to that the index saw 13 months of losses and compared to last year, inventories were down 10.2% in the last report.

Economists from Nomura said demand from retailers continues to grow but they suspect that wholesalers “will remain cautious about accumulating stocks given ongoing uncertainties about the outlook.”

Going against the consensus call, Ian Shepherdson from HFE said to expect another drop of around 0.5%. “But sales are still rising strongly, and we expect a 1% gain, driven by the durable goods sector,” he added.

2:00 ― The Budget Statement is expected to show a massive deficit in February. The consensus call is to see a gap of $223 billion in the month, compared with $193 billion in the previous February and $43 million in January. 

“February is typically a month of large deficits due to income tax refund payments,” economists at Nomura point out. “Given tax law changes in last year's stimulus bill ― including the Making Work Pay tax credit and the first time homeowners tax credit― refunds could be substantial this year.”

Bloomberg News calculates that the February deficit has averaged $144.3 billion over the past 5 years, much higher than the 10-year average of $108.0 million.

Treasury Auctions:

 

  • 1:00 ― 10-Year Notes