It would be stretching things to say that there has been a clear theme in markets overnight. Indeed, for the most part markets are trading broadly where they were this time yesterday. One exception is the bond market, with UK yields under particular upward pressure as investors await the pre-election Budget on 24 March (and the reaction of credit rating agencies to whatever fiscal consolidation is planned). There was little reaction to the US dataflow yesterday. A small decline in initial jobless claims was welcomed but at 462k the level is still a good way north of where we would like it to be in order to be confident that significant sustained growth in non-farm payrolls lied immediately ahead (beyond the clear positive influences that a rebound from February’s poor weather and census-related hiring will have). However, there are some signs that the stock of jobless claims is stabilizing . Meanwhile, the January trade balance reported a narrower than expected deficit, with a small fall in exports trumped by a slightly larger fall in imports. Whilst this was the first decline in exports since April last year, this largely reflected a little payback amongst erratics after a 3.4% mom increase in December.

The triple A rating of the US is at risk, S&P has warned, unless the country adopts a credible medium-term plan to rein in fiscal spending. In a report published yesterday, the ratings agency said that there were risks that “external creditors could reduce their US dollar holdings, especially if they conclude that Eurozone members are adopting stronger macroeconomic policies”. (FT) In other news, Fed’s Yellen is said to be Obama’s choice for Federal Reserve vice chair. Also in the news, White House’s Summers said US recovery has a very long way to go, however US economy is very close to employment growth and deficit must come down after recovery strengthens. (BBG)