OVERNIGHT MARKET UPDATE

OVERNIGHT MARKET UPDATE: ·         In US, the headline ISM non-manufacturing index was a little stronger than expected at 56.7  (mkt: +56.4) in January, up from 56.5 in January. While the ISM manufacturing survey has moderated  recently, the non-manufacturing ISM has remained elevated; combined the surveys continue to point to  US GDP growth of 3.5% y/y or more. Disappointingly, the employment component recorded a sharp decline   to 51.6 from 55.7. ·         Germany's service sector activity growth accelerated at the beginning of 2015 amid rising new business.  The final services Purchasing Managers' Index climbed to 54 in January from 52.1 in December. The flash  score was 52.7. The survey participants partly attributed the latest increase in activity to higher order  intakes, new customers and increased marketing efforts. Service sector output increased for 20 straight  months. Service sector employment rose further, extending the current period of growth to 15 months.  Companies reported another decrease in work outstanding. ·         In the currency markets, the reversal in oil prices overnight took some pressure off of the USD, and  commodity currencies remained range bound. Policy easing in China did little to buoy sentiment as it was  viewed primarily as a liquidity management exercise rather than as outright stimulus. ·         US Treasuries had a whippy night but yields are a touch lower yesterday morning, in contrast to higher  gilt and bund yields.   ·         US indices were little changed, with the Dow up 0.04%, and the S&P 500 down 0.4%.   ·         Crude oil prices declined following a 3-day rally as US crude inventories hit another record high  (413.1 million barrels). Inventories are likely to increase further as US refineries enter maintenance  shutdown season.   ·         Gold found support by the PBoC’s decision to ease policy and improved physical demand from India  but its recovery was held back by the fall in oil prices and stronger USD.