From Marc to Market:
Overview: From the pre-weekend low to yesterday's high, the NASDAQ rallied around 7.5% and is trading a little firmer ahead of the US open. Bottom-pickers emerged after the tech-heavy benchmark slid about 20% from its record high late last year. At the same time, a chorus of Fed officials have underscored Chair Powell's message that while a March rate hike is in the cards, there is no forward guidance. All options are open but there is no desire to surprise the market (see BOE last November). Many Asian centers remain on holiday, but Japan, Australia, New Zealand, and India all advanced. Europe's Stoxx 600, with a four-week loss in tow, is up about 1% near midday in Europe, led by industrials and information technology. Benchmark 10-year yields are around 1-2 bp softer in Europe and the US. It puts the 10-year Treasury yield around 1.76%. The dollar is trading off, extending yesterday's move.
The major foreign currencies are up 0.25%-0.50%, led by the Scandis and Swiss franc with the euro as a laggard. Emerging markets are led by the freely accessible currencies like the South African rand, Russian rouble, and Mexican peso. The JP Morgan Emerging Market Currency Index is pushing higher after rising over 1% yesterday, the most since before Xmas. Gold is testing the 200-day moving average near $1806. It's low from the end of last week was around $1780. The next technical target is in the $1817-$1825 area. March WTI is stalling ahead of last week's high (~$88.75). A break of $85 could signal a correction instead of consolidation. US natural gas is paring yesterday's 5% gain, while Europe's benchmark is falling another 8% after a slide of similar magnitude yesterday. Copper is trading with a firmer bias. The CRB Index has advanced for the past six consecutive weeks for a nearly 12.5% gain. It rose nearly 1% yesterday.
Asia Pacific
The Reserve Bank of Australia will end its A$4 bln a week bond purchases, but Governor Lowe did not moderate his rhetoric as expected to allow for a sooner rate increase. This sparked a brief wobble in the currency and rates, but market expectations did not change much. The swaps market is pricing in about 110 bp of rate increase over the next year and 25 bp is fully discounted by early H2. Other data today were weaker than expected. The flash January manufacturing PMI was shaved to 55.1 from 55.3 and 57.7 in December. December retail sales slumped 4.4% rather than the 2% expected after surging 7.3% in November.
After a series of disappointed reports at the end of last week, including December industrial production and retail sales, Japan's data surprised on the upside today. The January manufacturing PMI stands at 55.4 not the flash reading's 54.6 (54.3 in December). Unemployment unexpectedly slipped lower in December to 2.7% from 2.8%, while the job-to-applicant ticked up to 1.16 from 1.15. Lastly, we note that that the lower house of the Diet passed a resolution today on the eve of the Beijing Olympics, critical of China's human rights and especially its treatment of Uyghurs. South Korea's January trade deficit was more than twice as large as expected at $4.9 bln, a new record. Last January, it reported a $3.6 bln surplus. Exports were weaker than expected rising 15.2% year-over-year, down from 18.3% in December. Imports were also stronger than expected. They were 35.5% higher than a year ago. Economists had projected them slowing below 30%....
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