From Marc to Market:
Overview: Ukraine's Mariupol refuses to surrender as the war is turning more brutal according to reports. Iran-backed rebels in Yemen struck half of a dozen sites in Saudi Arabia, driving oil prices higher. China’s prime lending rates were unchanged. The MSCI Asia Pacific Index, which rallied more than 4% last week, traded heavily today though China and Taiwan's markets managed to post small gains. Tokyo was closed for the spring equinox. Europe's Stoxx 600 is steady after rising 5.4% last week. US futures are trading softer. Last week, the S&P 500 rallied 6.2%. Benchmark yields in Europe and the US are 2-4 bp higher, which puts the US 10-year Treasury near 2.18%. The greenback is mixed with the euro and Swiss franc posting minor gains. However, the dollar-bloc currencies, Scandis, and sterling have a softer bias. Among the emerging markets, central European currencies are faring best. Asian currencies are mostly lower. The JP Morgan Emerging Market Currency Index is lower for the third consecutive session, but it did rise about 3% last week, its first advance in four weeks.
Turning to commodities, gold is in a $1917-$1929 range today, around the middle of the $1900-$1950 range. Oil is rising for the third session. In the middle of last week, April WTI bottomed near $95 and today it is probing $109 a barrel. US natgas is up about 0.7% after a 3% gain last week. Europe's benchmark is up about 0.25% after falling 4.4% at the end of last week. It tumbled 24% last week after 34.5% the week before. Australia has banned alumina shipments to Russia. Iron ore fell 1.5%. It fell a little more than 4% last week. Copper is off 1.3%, giving back nearly half of last week's gain. May wheat is up 1.6% after falling a little more than 12% over the past two weeks. Egypt, which depends on Russian and Ukrainian wheat devalued the pound (~11%) and hiked rates by 100 bp.
Asia Pacific
In the middle of last week, China's Vice Premier He signaled a new phase in what has become a stop-go dynamic in economic policy. Officials move between structural reforms and pro-growth measures. He appeared to indicate that the crackdown on technology platforms was nearly over, support would be given to the property market, efforts to stimulate the economy would be delivered, and the economic consequences of the Covid policy would be minimized. This led to expectations that the loan prime rates would be set lower. They weren't. The one-year loan rate remained at 3.7% and the five-year benchmark was unchanged at 4.6%. The focus has shifted back to the possibility of a cut in reserve requirements. However, officials also seem to be emphasizing targeted measures too. Recall that last week, the NASDAQ Golden Dragon China Index that tracks Chinese companies that trade in the US snapped a four-week 31% drop with a 26.3% advance.
Rising energy costs will take a toll on east Asian external balances and boost inflation. These forces are already evident in Japan. Tokyo's March CPI is due late this week and it is expected to rise to 1.2%, which would be the highest since April 2019. Earlier today, South Korea reported trade figures for the first 20 days of March. Export growth slowed (10.1% vs. 13.1% year-over-year), while imports jumped (18.9% vs. 12.9%). Taiwan reported strong February exports (21% year-over-year), but the Economic Ministry warned that exports are likely to slow to 9%-11.8% this month....
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