From Marc Chandler at Bannockburn Global Forex:
Overview: The markets continue to digest the implications of yesterday's Fed move and Beijing's signals of more economic supportive efforts as the Bank of England's move awaited. The US 5–10-year curve is straddling inversion and the 2-10 curve has flattened as the Fed moves from one horn of the dilemma (behind the inflation curve) to the other horn (recession fears). Asia Pacific equities extended yesterday's surge. The Hang Seng led the charge with a 6.7% gain. Taiwan's benchmark rose 3% and the Nikkei gained 2.5%. Europe's Stoxx 600 is posting small gains and US futures are paring yesterday's late gains. The US 10-year yield is near 2.11% after poking briefly above 2.2% yesterday. European bond yields are mostly 2-3 bp lower. The Hong Kong Monetary Authority and Saudi Arabia hiked 25 bp too as their currency pegs required. The dollar initially rallied on the Fed statement but unwound the gains during the Chair Powell's press conference. It is lower against most currencies today. The Australian dollar is the strongest of the majors, helped by better-than-expected jobs report. The emerging market currencies are led today by the South Korean won, whose gains appeared to be fueled by strong demand for its bonds today.
Gold traded below $1900 yesterday before recovering. That recovery is being extended today and the yellow metal is near $1944. There may be potential toward $1962 in the next day or two. April WTI appears to have forged a base around $93-$94 and is trying to test $100. US natgas is firm after yesterday's 4% gain. Europe's natgas benchmark is recouping half of yesterday's 6.7% decline. Iron ore eased after jumping 8.5% yesterday. Copper is extending yesterday's gains and is up about 1.4%. May wheat is consolidating after falling near 7.5% yesterday.
Asia Pacific
China has underscored the shift from structural reforms to growth, which many market observers had already detected. However, investors now need to see the proof of the pudding, so to speak, which is to say policy adjustments. It could happen with the setting of the loan prime rates on Monday in Beijing, but more observers are talking about a cut in reserve requirements in the coming weeks.Australia employment rose 77.4k, more than twice the median forecast in Bloomberg's survey. The details were even stronger. Full-time positions rose by nearly 122k last month after a revised 6.1k decline in January (originally it fell by 17k). The unemployment rate fell to 4.0% from 4.2%, even though the participation rate rose to 66.4% from 66.2%. Australia’s short-term bond yields rose 3-4 bp as the data brought forward an RBA rate hike. The odds of a move at the end of Q2 has increased.
The BOJ meeting concludes tomorrow and standing pat will underscore the growing divergence with the US and others' monetary policy. The fiscal year end is approaching, and Japanese purchases/sales of foreign bonds and stocks remains subdued, but foreign investors for the second week have been significant sellers of Japanese stocks and buyers of Japanese bonds....
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