From Marc to Market:
Overview: The prospect that the Federal Reserve tightening cycle continues into early Q3 is underpinning the greenback today against most of the G10 currencies. The dollar bloc is the notable exception, and they are posting minor gains, perhaps encouraged by the firmer equity markets. The minutes of this month’s FOMC meeting appear to show wide support for quarter point hikes going forward and there did not seem to be much discussion of the conditions that would allow for the central bank to pause, which the market had expected around by the end of Q2. The euro has been sold below $1.06, while the greenback is holding just below JPY135 ahead of a big day tomorrow in Tokyo, which seen national inflation figures and BOJ Governor nominee Ueda questioned in the Japanese parliament. A hawkish hold by the Bank of Korea, signaling the risk that the pause is short lived, is helping the South Korean won lead the emerging market currencies today, but the Mexican peso continues its dramatic advance and is trading at new five-year highs today.
Asia Pacific equities were mostly lower following yesterday’s losses in the US. However, Taiwan and South Korea bucked the trend. Europe’s Stoxx 600 is holding on to minor gains. US equity futures are firmer, and the S&P 500 is looking to snap a four-day skid. Benchmark 10-year yields are mostly a little higher. The 10-year US Treasury yield is up a couple basis points near 3.94%, while European rates are 1-2 bp points higher. Italy’s 10-year yield is slightly softer. UK Gilts are under the most pressure as the 10-year yield rise four basis points. Gold recorded an outside down day yesterday and is consolidating little changed near $1827 in the European morning. April WTI fell to a two-week low yesterday near $73.80 and is also consolidating today. API reportedly saw another large build of US crude stocks for the ninth consecutive week. If confirmed by the EIA later today, it would point to US crude inventory near a 21-month high. Natgas is pinned near its lows....
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