US indices have stalled their advance today after ADP payrolls (139K vs street 155K) and ISM non-manufacturing PMI (51.6 vs street 53.5) both came in below expectations. The biggest surprise though was the big downward revisions to private sector payrolls between October and January raising questions of whether job weakness has been driven by more than just the weather. Perhaps the biggest surprise in the reaction to this news is that markets haven't gone down more and that the S&P remains within striking distance of all-time highs. USD is running in the middle of the pack. Overall this suggests a mixed reaction to the news with traders uncertain about the impact this may have on the Fed's tapering program. The beige book regional economic report indicated that worse than usual winter weather impacted employment and retail sales and disrupted supply chains. Apparently the word “weather” appeared over 200 times in the report. The Fed indicated that the Philadelphia and New York regions were hit the hardest, but 8 out of 12 regions still managed to post increased levels of activity in the six weeks that ended Feb 24th. Capital continues to flow out of defensive havens and back into risk markets with AUD and NZD outperforming while JPY and CHF underperform. The situation in Crimea appears to have stabilized for now which comes as no surprise with the Sochi Paralympics starting on Friday, but could flare up again at any time. Energy markets are active once again today. WTI, Brent and gasoline along with grains are all coming back down today as political risks ease for the moment. Natural gas has resumed its retreat as the end of heating season approaches (fingers crossed!). In Asia Pacific trading today, the main focus remains on Australia with retail sales and trade data due, although Chinese markets may also be active in the fallout from yesterday’s GDP growth forecast. Tomorrow brings two central bank meetings for Europe and a number of mid-tier data points for North America. All this remains but a prelude to Friday’s North American payroll reports with nonfarm payrolls particularly important with the street looking for confirmation or rejection of the big downward revisions in the ADP report. Economic News Significant announcements released overnight include: Canada interest rate decision 1.00% no change as expected Poland interest rate decision 2.50% no change as expected US ADP payrolls 139K vs street 155K previous revised way down to 127K from 175K US non-manufacturing PMI 51.6 vs street 53.5 US crude oil inventories 1.4 mmbbls vs street 1.3 mmbbls US gasoline inventories (1.6 mmbbls) vs street (1.0 mmbbls) Eurozone retail sales 1.3% vs street (0.2%) Eurozone GDP 0.5% as expected Service PMI reports include: Brazil 50.8 vs previous 49.9 UK 58.2 vs previous 58.3 Germany 55.9 vs previous 55.4 Spain 53.7 vs previous 49.4 Italy 52.9 vs previous 49.4 France 47.2 vs previous 46.9 Upcoming significant announcements include: 11:30 am AEDT Australia retail sales street 0.4% 11:30 am AEDT Australia trade balance street $100M 6:30 am GMT France unemployment rate street 10.6% 8:00 am GMT UK Halifax house prices street 7.3% 10:00 am GMT Greece unemployment rate previous 28.0% 11:00 am GMT Germany factory orders street 7.5% 12:00 pm GMT UK monetary policy decision 0.50% and £375B QE no change Expected 12:45 pm GMT ECB monetary policy decision 0.25% no change expected 8:30 am EST US jobless claims street 336K 10:00 am EST US factory orders street (0.5%) 10:00 am EST Canada Ivey PMI street 53.1 vs previous 56.8 10:30 am EST US natural gas storage street (137 BCF)

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