From Marc Chandler at Bannockburn Global Forex:
Overview: A pullback in yields is bolstering risk appetites today, lifting equities and weighing on the greenback. Most Asia Pacific equity markets rallied at least 1%, led by Hong Kong. It was the best regional performance in a month. Europe's Stoxx 600 is up nearly 1.5% in its third consecutive advance, while US futures are pointing to a higher opening. The US 10-year yield has backed off from the test on the 2% threshold and is around four basis points lower near 1.92%. European benchmark yields are 3-5 bp lower. The dollar has softened by as much as 0.25%, led by the Scandis and the Antipodeans. Emerging market currencies are also mostly firmer, with the JP Morgan EM FX index rising for the third session. Gold is pushing higher for the fourth consecutive session to test $1830. After falling about 3.25% in the past two sessions, March WTI is stabilizing above yesterday's low near $88.50. After steadying yesterday, US natural gas prices are near two-week lows, while Europe's benchmark is firm after falling 7.5% over the last two sessions. Iron ore is snapping a six-day advance, while copper is under pressure for the third consecutive session.
Asia Pacific
The Bank of Japan's absence continues to be notable. Many expected the central bank to step in to buy bonds to defend the upper end of the 10-year yield band at 0.25%. However, they have been patient, and may even allow the yield to rise above the cap, if it thought it would be for a short time. The BOJ has its next scheduled purchases for February 16. Officials seem confident that it has the tools to enforce the cap if needed, including fixed rate operations.Chinese officials warned against about false price disclosure in the iron ore market, which may have triggered today's sell-off from five-month highs. Ideas that strong infrastructure efforts and easier monetary policy helped drive the metal higher. Officials warned against speculation and fraudulent price information last month. Iron ore had extended its rally when Chinese officials postponed the deadline for "peak-emissions" in the steel sector by five years to 2030....
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