Dollar Surges On Portugal Debt Re-Rating

The markets are lower this morning on the heels of some mixed economic data, as well as news out of Portugal that Fitch has lowered its sovereign debt rating from AA to AA-.

The debt re-rating has caused the euro to selloff and the dollar to surge to a 10-month high. The strength in the dollar is weighing on commodities, with oil down near $80.50 and gold dipping below $1100.

In economic news, new home sales for February fell -2.2%, weaker than expected. Durable goods orders were up +0.5% (vs. +0.6% consensus), and ex-transportation orders rose a better than expected +0.9%.

In Asia, markets were mixed overnight, with Japan and China eking out small gains. The 10-year yield is sharply higher to 3.76%, and the VIX is spiking +9.25% to 17.87.

Among the sector ETFs, they are all lower this morning, with financials (-0.06%) down the least. Real estate (IYR) is bucking the weakness so far (+0.14%), while gold miners (GDX) are down the most (-3.25%).

Trading comment: The market continues to act well. I would not be surprised to see a small 1-2 day pullback, but I still think many investors remain underinvested (or short), and that money wil continue to be put to work on any pullbacks into quarter-end.

We are also getting into that window where we will start to hear about upcoming earnings for Q1, and I think that earnings reports for the most part should be strong, and that analyst revisions will continue push estimates higher (which should help stock prices).