From Marc to Market:
Overview: Better earnings from Amazon, Pinterest, and Snap lifted US tech after th dramatic loss on Wall Street yesterday. Most Asia Pacific bourses rose, led by the 3.75% rally as Hong Kong re-opened. India and New Zealand were exceptions and slipped lower. Real estate and industrials are dragging the Stoxx 600 in Europe lower (~-0.75%). This is sufficient to offset the week's earlier gains and threatens to extend the losing streak for a fifth consecutive week. US futures are firm. The adjustment in rates continues. Japan's 10-year is approaching the upper end of the range permitted under yield-curve control (0.25%). The fx sensitive two-year German yield is up for the ninth consecutive session, during which time it has risen by more than 35 bp. The US premium is narrowing for the sixth session, and it is more than 30 bp tighter. The swaps market is pricing in about 10 bp of tightening by the ECB around mid-year. The US 10-year year is hovering around 1.82%., a four-basis point increase on the week. The dollar is mostly firmer, paring this week's losses. The dollar-bloc and Swiss franc are under-performers today. The euro extended yesterday's gains but is holding below last month's high near $1.1485. The South Korean won, and Russian rouble lead the emerging market complex higher. The rouble has appreciated 2.5% this week, leaving it off about 1.6% for the year. The JP Morgan Emerging Market Currency Index is little changed. It is up about 1% this week before local Latam currency markets open. It would be the fourth weekly gain in the past five. A winter storm around Texas spurs fears of a disruption to the US energy market and helping lift oil and gas prices. Beyond the weather, low inventories, and limited capacity to boost output are underpinning prices. A couple of large producers announced plans to boost shale production in the US. March WTI is now above $91.50, as it rises for the seventh consecutive week. Gold is firm and is making new highs for the week near $1815. It is up about 1.2% for the week. Copper has little changed on the day, and is up about 3.7% for the week, after falling 4.7% last week.
Asia Pacific
The Reserve Bank of Australia's monetary policy statement did not impress the market. The RBA continues to imply that the rise in prices in temporary. It sees core CPI poking above 3.0%, but then returning to 2.75% through mid-2024. The wage price index is expected to rise 2.75% this year and 3% over 2023. Governor Lowe said earlier this week that a rate hike this year is a "plausible scenario." The market thinks it is a certainty. The swaps market has the first hike priced in around mid-year and about 120 bp of hikes over the next 12 months.
South Korea's January CPI rose 0.6%, a bit more than expected. The year-over-year rate eased to 3.6% from 3.7%. The median forecast (Bloomberg survey) expected a 3.4% rate. The core rate rose to 3% from 2.7%, which was also a little higher than expected. The central bank meets on February 24. It hiked rates twice last year (August and November) and hiked again last month, lifting the seven-day repo rate to 1.25%. While a hike is possible, March seems like a more likely timeframe.Before China's mainland markets re-open, the Caixin non-manufacturing and composite PMI will be reported. Weaker readings are expected. Travel during the holiday appears to have not been particularly strong. When the mainland markets closed last week, the dollar finished at almost CNH6.3680 against the offshore yuan. It is currently changing hands around CNH6.3580. The dollar settled last week around CNY6.3610 against the onshore yuan....
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