From Marc to Market:
Overview: The 7% December CPI print did not prevent the dollar from weakening broadly. The Dollar Index fell by 0.65%, the largest decline since late November. The 10-year yield rose by less than a basis point to poke above 1.74%. The S&P 500 spent most of the session chopping in a 15-point range. The greenback is still offered broadly, with the dollar-bloc and sterling leading. Emerging market currencies are narrowly mixed, with the Turkish lira's 2%+ slide being the chief outlier. The JP Morgan Emerging Market Currency Index is heavier after rising around 1.2% in the past two sessions. Equities are faltering. Japan, China, and South Korea were a drag on the MSCI Asia Pacific Index, while the Stoxx 600 has turned higher after a softer opening, after rising by about 0.65% yesterday. US futures are trading with a slightly firmer bias. Benchmark 10-year European yields are narrowly mixed, while the US yield is near 1.75%. Gold is snapping a four-day advance after approaching $1830. Oil prices are also paring yesterday's gains, which had lifted the February WTI contract above $83. It is consolidating in a narrow range. Nickel reached a 10-year high yesterday as Indonesia said it could introduce an export tax but is softer today. Other industrial metals that we track are softer too. Iron ore is off a little more than 3% after rallying more than 5% over the past couple of sessions. Copper is pulling back around 1% after a similar two-day advance. US natural gas prices are down a little more than 2% today after a four-day ~25% rally. Europe's natgas benchmark is off for a third session and is off about 12.4% this week.
Asia Pacific
Tokyo raised its Covid alert amid the surging pandemic. It now stands at the second highest of four levels. Cases in the capital are the highest in four months. Japan had seemed more resilient in the face of the Omicron variant, but it now looks like the contagion was simply delayed. Three of Japan's worst areas are now in a quasi-emergency posture, allowing local authorities to impose restrictions on bars and restaurants. Tokyo will also re-impose restrictions if the hospital bed utilization reaches 20%. It was near 14% yesterday.Japan no longer will require medical workers who have had close contact with Omicron cases to quarantine due to stress on the health care system. Australia has made similar allowance for transport and freight workers in a bid to address the supermarket shortages. Prime Minister Morrison said that 10% of the workforce was on leave at any time due to the virus, while some media outlets reported that absenteeism is near 50% in the transport sector. Australia was in a zero-Covid policy, but as of Wednesday, it reported more than a million cases. The general election is likely in Q2, and the government's handling of the virus will be a key issue....
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