Call it the “calm after the storm”: Equity futures are set to open at more supportive levels, yields are slipping after a post-Friday surge, and the dollar is in retreat against most of its major rivals.

Reaction to Friday’s blowout jobs report is starting to fade, but the Fed’s jawboning efforts began in earnest yesterday when Atlanta’s Raphael Bostic told Bloomberg that he could see central bankers delivering another three quarter-point hikes in the months ahead if the economy remained strong. Chair Jerome Powell could follow this up by calling 2023 rate cuts unlikely when he speaks at the Economic Club of Washington at 12:40 pm – or he could repeat last Wednesday’s comments, hoping they’ll hit differently against a booming employment backdrop.

Oil prices climbed after earthquakes in Turkey and Syria closed the Ceyhan terminal on Turkey’s Mediterranean coast, but are now slipping back as reports suggest the stoppage should be temporary. The supply disruption comes as major producers struggle to increase output, while Chinese demand recovers and releases from the US Strategic Petroleum Reserve come to an end. The global Brent benchmark is up roughly 1.1 percent on the day, and North America’s West Texas Intermediate has gained 1.4 percent.

The Reserve Bank of Australia delivered a ninth consecutive increase in its cash rate and signalled more to come, underlining a widening divergence between central banks in the developed markets, and within the commodity bloc more specifically. Although inflation pressures have shown signs of subsiding elsewhere, core price growth has continued to beat market and central bank forecasts in Australia, suggesting that tightness in labour markets is (so far) offsetting a policy-engineered downturn in real estate prices. Governor Lowe said “The Board expects that further increases in interest rates will be needed over the months ahead to ensure that inflation returns to target and that this period of high inflation is only temporary”.

The US trade deficit is expected to widen to $68.5 billion in December from $61.51 billion in the prior month. With capital flows trumping trade flows in driving exchange rates over recent decades, markets are unlikely to react.

President Biden will deliver his second State of the Union speech tonight. In contrast with his predecessor, Biden’s key talking points have been telegraphed in advance and market implications should be minimal – but an overtly combative tone in his comments on debt ceiling-related issues or the US-China relationship could weigh on overall risk appetite.

Currency markets are beginning to prepare for a Saint Valentine’s Day massacre. Implied volatility expectations are rising around the February 14 release of January’s inflation data, suggesting that some are hedging against an upside surprise that piles more pressure on the Federal Reserve and pushes rates higher. It’s not very romantic, but:

Roses are red,
Violets are blue,
Job growth is still very high,
And inflation is too.