From Marc to Market:
Overview: The markets remain on edge. Asia Pacific and US equities have yet to find stable footing, and inflation fears are elevated. The foreign exchange market has turned quiet as the dollar consolidates its recent losses. China and Hong Kong escaped the sell-off equities that saw Tokyo and Seoul fall over 1%, but Taipei was the highlight with a stunning 8.6% intrasession plunge before recouping a little more than half. A combination of more Covid-related restrictions and the global sell-off of tech took a tool. TSMC, which is 30% of Taiwan's index, finished nearly 2% lower after a more than 9% slump. The US removed Xiaomi from the blacklist, and shares rallied in Hong Kong. The less-tech sensitive Dow Jones Stoxx 600 is trading steadily after dropping nearly 2% yesterday. US futures are still heavy. Ahead of today's auction, the US 10-year yield is slightly softer, around 1.61%. European bond yields are also around a basis point or so lower. On the back of a larger than expected Australian fiscal stimulus, its 10-year yield jumped five basis points to 1.76%. The Antipodeans are the weakest among the major currencies, off about 0.45%-0.50% near midday in Europe, while the others are 0.05%-0.15% softer. The Canadian dollar is the only major posting a small gain against the greenback. Emerging market currencies are mostly lower as well. The Turkish lira and the South Korean won are off almost 0.5% to bear the brunt. Gold is consolidating after recovering from $1818 to $1838 yesterday. Crude oil remains bid, and the June WTI contract is mostly holding above $65 today.
Asia Pacific
Australia's budget unveiled late yesterday points to a larger than expected deficit as the government prepares for next year's election and supports the monetary effort to spur a strong recovery. New initiatives for infrastructure and social efforts, such as elderly care and tax cuts, were among the highlights. S&P warned that the fiscal stance justifies its negative outlook for Australia's AAA rating.
China reported a larger than expected slowdown in lending last month. New bank loans slowed to CNY1.47 trillion from CNY2.73 trillion in March. Non-bank lending slowed from CNY610 billion to CNY380 bln. That put total aggregate financing at CNY1.85 trillion compared with CNY3.34 trillion March and well below the CNY2.29 trillion anticipated. Separately, reports suggest that officials are allowing an accelerated rate of failures....
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