From Marc to Market:
Overview: Surging yields and plummeting equities are the main developments today. The US 10-year yield is pushed above 1.80% and the two-year yield is above 1% for the first time since February 2020. European yields are pulling back after jumping 2-5 bp. The MSCI Asia Pacific Index is off for the fourth consecutive session. Only Shanghai among the large bourses escaped the carnage. Europe's Stoxx 600 is off around 1.1% to test last week's lows after rising 0.7% yesterday. US futures are 1.0%-1.5% lower. The dollar is firmer against most currencies today. Among the majors, the Canadian dollar, yen, and Swiss franc are proving the most resilient as the precipitous drop in equities offset the rise in yields. The Scandis and Antipodeans are the hardest hit, off around 0.25%-0.50%. Nearly all the emerging market currencies, but the South Korean won are being sold. The Turkish lira, South African rand, and Russian rouble (~-0.6%-0.7%) are leading the move. Don't look for gold to be much of a haven. The yellow metal is near a five-day low around $1810. Oil prices are extending their rally with March WTI pushing toward $85. Recall it finished last month slightly below $75.00. US natgas is firm after falling more than 12% in the last two sessions, while European natgas (Dutch benchmark) is off about 4.5% to a three-day low. Iron ore stopped a three-day slide with a 2.6% gain, while copper is extending the loss seen in the last couple of sessions.
Asia Pacific
BOJ Governor Kuroda pushed hard against creeping speculation that the central bank was poised to adjust interest rates any time soon. There has been some talk that the BOJ could raise rates well before the 2% core inflation target was met. He was clear: "We're expecting long and short-term policy rates to remain at the current levels or fall even lower...Raising rates is unthinkable." Kuroda seemed to all but rule out a rate hike during his term that expires in April 2023.
As expected, the BOJ adjusted its inflation (up) and growth (down) forecasts. Inflation in the new fiscal year beginning April 1 is expected to be 1.1%, up from 0.9%. It is expected to remain there in the following fiscal year too (up from 1.0%). This fiscal year growth forecast was reduced to 2.8% from 3.4%, but next year's was lifted to 3.8% from 2.9%. However, growth in the following fiscal year was shaved to 1.1% from 1.3%.China's real estate market remains distressed, and dollar bonds of many developers are under pressure. There is more talk about a new infrastructure initiative. The CSI 300 Infrastructure Index rose 3.7% today, its largest rise in four months. The PBOC cut the one-year medium-term lending facility rate and the seven-day repo rate yesterday for the first time in two years. The loan prime rate is set on Thursday, and although the one-year was trimmed by five basis points last month, a cut in the five-year would ostensibly allow for lower rate mortgages. The takeaway is the PBOC has many levers to ease policy and it is expected to use them, and this in in stark contrast with most of the countries who are tightening monetary and fiscal policies....
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