Daily Market Color February 26, 2016All Eyes on G-20 and GDP Data US Stocks fluctuated while Treasuries sold off across the curve as markets reacted to Chinese stimulus optimism and stronger-than-expected US economic data. The G-20 meeting of central bank governors kicked off in Shanghai today where policymakers gathered to discuss ways to boost global growth. People’s Bank of China Governor Zhou Xiaochuan assured the audience that the world’s second largest economy remains on solid footing and will not need to devalue its currency to boost exports. Zhou said the PBoC intends to keep the yuan stable against a basket of currencies after US Treasury Secretary Jack Lew criticized Beijing for not clearly communicating its policy intentions. Zhou also said the PBoC has additional tools in its monetary policy to deal with downside risks to the economy, and added that fiscal policy will be more proactive going forward, which was well received by investors. US economic data released today surprised to the upside. Q4 GDP was unexpectedly revised up to 1% from the previously reported 0.7%. Smaller drags from inventories and net exports were the primary cause of the upward revision, which helped offset downward revisions to consumer spending. The better-than-expected report may cause some economists to revise their outlook for Q1 GDP. Other data showed consumer spending rose strongly in January, and underlying inflation increased by the most in four years. US fundamentals appear to be firming and may encourage the Fed to hike rates again more quickly than the market is currently anticipating. The US Treasury held the postponed $28 billion 7-year auction this morning and scheduled Fed speakers include Governor Powell (hawk, voter) Williams (moderate, non-voter ’15) and Governor Brainard (dove, voter).