From Marc to Market:
Overview:Financial strains eased yesterday, and short-term yields jumped. The two-year US yield jumped 25 bp to pierce 4%. Yet, the dollar fell against most of the major currencies yesterday and is mostly softer today. Banking stress is ebbing. The Topix bank index snapped a three-day decline and jumped nearly 2% today to recoup the lion's share of its three-day decline. The Stoxx 600 index of EMU banks is extending yesterday's 1,7% advance. The AT1 ETF up about 0.25% after falling by more than 3.6% in the past three sessions.Most large bourses in the Asia Pacific region rose today, led by 1%+ gains in Hong Kong, the mainland shares that trade there, and South Korea's Kospi. China and Taiwanese markets were sold. Europe's Stoxx 600 has edged a little higher, while US futures are a bit softer. Benchmark 10-year yields are 6-10 bp higher in Europe and the US 10-year yield is up a little near 3.54%. Gold is trading lower for the third consecutive session. It traded above $2000 before reversing lower ahead of the weekend and slipped to almost $1944 yesterday. It is trading quietly, mostly above $1950 today. May WTI is extending its recent gains and near $73.50, it is at its best level in two weeks. Chinese demand and some supply disruptions have underpinned crude. The 20-day moving average is around $73.35 and it has not closed above the moving average since March 6. That said, the $74.65 area is the next important chart area....
And deeper into the daily missive:
....Before the weekend, the Fed funds futures market had discounted about a 1-in-4 chance of a 25 bp hike at the next FOMC meeting on May 3. Yesterday, there was a 2.7% jump in the KBW bank index, and nearly as large a rally in Charles Schwab shares, which was the subject of pre-weekend jitters, and almost a 5% rally in Deutsche Bank shares, which had fallen by more than 12% in the previous three sessions. The futures market now sees the chances of a hike in May as a little better than a 50/50 proposition. There is no FOMC meeting in August, so the implied yield of 4.75% of the August contract implies a quarter-point cut by early Q3. On March 8, the implied yield was 5.67%. Similarly, the swap market continues to discount a 25 bp cut by the Bank of Canada at its July 12 meeting. At the end of last week, the market has discounted 40 bp of cuts by then....
....MUCH MORE
