From Marc to Market:
Overview: Most markets are closed for the May Day holiday. News that JP Morgan will acquire most of First Republic assets will be a relief for the markets. US equity futures are slightly firmer, and the 10-year Treasury yield is around three basis points higher, slightly above 3.45%. Recall that before the weekend, it has fallen from almost 3.55% to 3.42%. The market has more than a 90% chance of a quarter-point hike discounted for Wednesday. The year-end rate is still seen near 4.50%, but the market now recognizes about a 15% chance of a hike at the next meeting (June 14). Japan, Australia, and New Zealand markets were open. The first two equity market rose, while New Zealand slipped. The weakness of the yen helped lift the Topix by 1%. Europe's Stoxx 600 is edging slightly high after finishing last week with the first back-to-back gains since April 13-14.
The dollar is mostly firmer. The Australian dollar and Swiss franc are the notable exceptions. The Dollar Index is slightly higher for the third consecutive session. If sustained, it would be the longest advance since late February. Eastern and central European currencies are softer, while the Mexican peso is about 0.2% better. Gold is mired in the pre-weekend trading range and is a little softer, as one might expected given the greenback's upside bias and the higher US yields. The yellow metal is inside the range set last Thursday ($1974-$2003). It may be the second session that gold holds below $2000. June WTI rallied 2.7% before the weekend but has given that mostly back today with a 2.05% loss bringing to back to almost $75. Last week's low was slightly below $74....
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