No Surprises From SNB; PPI, TICS Flows And Manufacturing Next

SNB left rates unchanged and revised outlook; Eurozone employment declined and labor cost rose; Spanish and French bond auctions. Market focuses on PPI, empire state manufacturing, jobless claims, TIC data and Philly FED index. More on rising bond yields and the technical relationship with stocks and USD is found in last nights Premium Intermarket Insights below.

The USD trades little changed since the beginning of the London session. Larger move lower is only seen against JPY. European equities are mixed in -0.2% to 0.2% range and the relative strength winners are NZD and JPY.

The SNB left the 3 month libor rate between 0 and 0.25% in line with expectations and reiterated EURCHF floor at 1.20. The SNB added it is ready to take further measures if the economy or deflation requires it to do so. 2012 GDP outlook was revised to 1% from 0.5% but the inflation is anticipated to decline to -0.6% from -0.3%. In 2014, inflation should reach 0.6%. EURCHF initially fell to 2084 but was able to recover a bit and trades around 2110.

Eurozone employment declined in Q4 0.2% from previous -0.2% q/q (-0.2% from 0.3% y/y) and the labor cost rose 2.8% from 2.6%.

Spain sold EUR 3.01 bln worth of bonds today (EUR 2.5 3.5 bln target). According to MNI, Spain already completed 43.7% of its 2012 funding needs and it is well ahead of other Eurozone countries in that respect. France also had an auction today and it reached a full take up by selling EUR 8.52 bln worth of bonds with various maturities.

In other news, the IMF is expected to approve the 2nd Greek bailout today. Meanwhile, Greek unemployment rate rose sharply to 20.7% in Q4 from 17.7% in Q3. USDJPY along with other JPY crosses fell rather sharply at the end of the Asian trading after reaching new recent highs earlier during the session and ECB deposits fell significantly on Wednesday to EUR 686.42 bln from Tuesday's EUR 815.98 bln.

Gold is trying to stabilize after yesterday's nearly 50 USD decline as investors have been moving out of gold positions into equities over the past few sessions. Key support is seen around the 1550 level.

A busy US session starts today at 8:30 am ET with February PPI that is seen higher at 0.5% from 0.1% as food and energy are expected to rebound (core PPI exp. 0.2% from 0.4%). Empire manufacturing is expected to decline in March to 17.6 from 19.5 and jobless claims should come back down a bit to 357K from last week's 362K.

Net TIC flows from January are due at 9:00 am and are anticipated higher at USD 38.9 bln from previous USD 17.9 bln. Market players will be watching the the details on Chinese holdings of US treasuries. Another pullback in those figures may further boost yields. Philadelphia FED manufacturing index that is due at 10:00 am and is expected to improve in March to 11.9 from 10.2.

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