From Marc to Market:
Overview: The US dollar is mixed today. The dollar-bloc currencies are firmer, while the euro and yen are softer. We had anticipated a recovery of the dollar on ideas that the market has too aggressively pushed down US rates, and pricing in more Fed easing with higher confidence than seems to be warranted by the recent data. However, US rates have not recovered, but the dollar has. Partly, this reflects that rates have fallen as faster if not faster elsewhere, and especially in the eurozone after last week's preliminary CPI. Among emerging market currencies today, the Mexican peso's 0.20% gain is leading a few currencies higher, but most have a softer tone.
Equities are firmer across the board. Nearly all the markets in the Asia Pacific region were higher, led by a 2% rally in the Nikkei. Europe's Stoxx 600 is extending yesterday's 0.4% gain with another 0.25% increase. US index futures are trading higher. Benchmark 10-year bond yields, on the other hand, are 2-3 bp firmer in Europe. The 10-year US Treasury yield is a about three basis points higher near 4.20% and the two-year yield is up four basis points to about 4.61%. Gold is consolidating inside yesterday range after the extreme price action on Monday. January WTI has slipped lower. It reach almost $71.40, its lowest level since July....
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