Economic Indicators & Central Banks:
A slip in risk appetite and a solid 5-year auction gave Treasuries a little boost yesterday with yields ending modestly lower.
Profit taking on the strong gains for the quarter, and indeed record highs last week, and some tax loss selling weighed.
Wall Street ended with small losses. The NASDAQ fell -0.42%, with the S&P500 off -0.28%, while the Dow dipped -0.08%.
The US consumer confidence undershot assumptions and joined a Michigan sentiment down-tick to 76.5 from 76.9 in February and a 30-month high of 79.0 in January. All the surveys face headwinds from high mortgage rates, tight credit conditions, and recession fears.
The US durables report slightly beat estimates thanks to a restrained 3.3%.
Data showed that industrial profits in China jumped 10.2% in the first 2 months of the year, but signs of an ongoing recovery means there is a lower chance of further stimulus. China officials also seem to have tightened their grip on the currency once again.
Japan officials have also engaged in some verbal intervention over the past week, but that didn’t prevent the Yen from hitting a 34 year low against the Dollar.
Market Trends:
Today, European stock futures are lower ahead of the ESI economic confidence reading and the 4-day Easter holiday weekend.
US futures are in demand after a mixed close across Asia.
The China bourses underperformed, Hang Seng & CSI 300 are down -1.4% and -1.2% respectively.
Bond yields are slightly lower, with the 10-year Treasury rate down -0.6 bp at 4.23%, and the 10-year JGB rate down -1.5 bp.
Bunds are outperforming, and the German 10-year rate has corrected -2.6 bp in early trade, as markets expect Spanish HICP numbers to confirm the downtrend in headline inflation.
Financial Markets Performance:
The USDIndex recovered to close slightly firmer at 104.10. It’s a fourth straight close over 104.
The Yen is at 34-year low retesting once again the 152 high.
Gold extended gains as the focus shifts to key US PCE numbers on Friday. Bullion is currently at $2179 after breaching $2200. Geopolitical risk, central bank buying, bond rally and rate cut expectations solidifying, all added to the strength in gold.
USOIL steady for a 2nd day in a row below $81.00.
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Andria Pichidi
Market Analyst
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