From Marc to Market:
Overview: Talk from two Fed officials yesterday, which seemed to validate market expectations eased the upward pressure on the dollar and helped equities launch a dramatic recovery. The market is pricing in a terminal rate near 5.50%, a little higher than the median dot in December. The S&P 500 posted a dramatic recover and posted a potential bullish key reversal. Its 0.75% closing gain was the largest advance in nearly three weeks. A large drop in Tokyo's February CPI helped take pressure of Japanese government bonds where the 10-year JGB was pushing through its 0.50% cap. Japanese and Indian equities led the regional equity markets higher. Europe's Stoxx 600 is up 0.7% to bring the weekly gain to around 1.2%. US equity futures also enjoy a firmer bias. This week's rise in benchmark 10-year yields is being pare today. European yields are off 2-6 bp, with the periphery outperforming the core. The 10-year Treasury yield is off 5 bp to return to 4.0%. Two-year yields are also lower but less than the 10-year yields with notable exceptions in Italy and Greece.
The US dollar is trading heavily against the all the G10 currencies. The Swiss franc and sterling are the strongest, gaining about 0.4%. The greenback is set to record a losing week against the major currencies, except the Norwegian krone. The Dollar Index is set to snap a four-week advance. Among emerging market currencies, the South Korean won's 1.1% advance is leading today's move, but the Mexican peso, which set fresh five-year highs today, is the strongest this week, with a 1.8% advance. The heavier dollar and softer rates are helping gold recover from the test on $1800 earlier in the week. It is making a new high for the week near $1848 today. April WTI is consolidating its three-day rally that lifted it to almost $78.60 yesterday, a nearly two-week high.Asia PacificTokyo's CPI fell to 3.4% in February from 4.4% in January. Fiscal policy, in the form of subsides for households and businesses, was an important driver. It bodes well for the national figures on March 24. Still, somewhat worrisome, or incongruous, is the uptick in the measure that excludes fresh food and energy. That rose to a new high of 3.2% from 3.0%....
