From Marc Chandler at Bannockburn Global Forex:
Overview: US yields eased yesterday after the slightly lower than expected core CPI reading and "sell the rumor, buy the fact" type of activity. The jump in the 10-year yield today to 2.78% more than erased the decline. It has softened in the European morning to 2.74%. The yen tried to snap a seven-day decline yesterday but failed and the higher US yields have lifted the dollar to new 20-year highs against the yen. The weaker yen, in turn, seemed to help lift Japanese stocks. Most large markets but China and India rose in Asia Pacific trading. Europe's Stoxx 600 is struggling, after falling Monday and Tuesday. European 10-year benchmark yields spiked 4-7 bp higher earlier today but are mostly 1-2 bp better. Following higher than expected CPI, the 10-year Gilt yield is up 5 bp. US equity futures are firm after yesterday's wobble. The greenback is broadly mixed. The New Zealand dollar, where the central bank delivered a 50 bp hike, is off twice as much as the yen (1.0% vs. 0.5%). Among emerging market currencies, the South African rand is extending its gains for a fourth session and the Mexican peso is higher for a fifth day. The Israeli shekel is also extending its gains. It is gaining for the fourth session following yesterday's 25 bp rate hike.
Gold is pushing to new 4-week highs near $1980. June WTI is firm. It jumped 6.6% yesterday to resurface above $100 a barrel. US and European natural gas prices are firmer too. Iron ore saw its first gain in six sessions yesterday but gave back the lion's share today. July copper is flattish after yesterday's 1.7% advance. July wheat is edging higher again after a three-day 8%+ rally.
Asia Pacific
Economists favored a 25 bp hike by the Reserve Bank of New Zealand but the swaps market favored a 50 bp hike (75%). The RBNZ delivered a 50 bp hike. It is the first time in more than two decades that the central bank raised rates by more than 25 bp. It called the move "the path of least regret." The swaps market favors another large move next month (May 25). The New Zealand dollar initially jumped about half-a-cent on the news but met a wall of sellers near $0.6900 and has reversed lower to trade below yesterday's low (~$0.6800).China surprised with a larger than expected March trade surplus. The median forecast in Blomberg's survey was for a $21.7 bln surplus after a $30.6 bln surplus in February. Instead, on the back of stronger exports and weaker imports, the surplus rose to $47.4 bln. Exports rose 14.7% from a year ago compared with 12.8% expected. Imports fell (0.1%) for the first time since August 2020. A wide range of imports fell, and this seems clearly related to the Covid-related port and dock congestion in Shanghai and nearby areas. The distortions are expected to persist. China's surplus with the US rose to $32.1 bln from $26.7 bln. The surplus with the EU rose to $20.1 bln from $17.8 bln. The surplus with ASEAN rose to $7,7 bln from $2.7 bln. These three areas account for the increased overall surplus. Note that China's deficit with Russia rose to $4 bln from $1 bln, playing on fears the Beijing is assisting Moscow, which is increasing being isolated....
....MUCH MORE
