From Marc to Market:
Overview: News that the Japanese economy expanded rather than contracted in Q4 23 has fanned expectations that rates could be as early as next week. This is helping keep the yen supported, though it remains in the pre-weekend range, albeit barely. While the dollar is softer but consolidating against the euro, Swiss franc, and Canadian dollar, it slightly firmer against the Antipodeans and Scandis. Sterling is also in a narrow range, but with a softer bias. Most emerging market currencies are firmer, with the Hungarian forint and Turkish lira the notable exceptions. A quiet North American session looks likely with a light economic calendar ahead of tomorrow's US CPI.
The yen's recovery and rate speculation weighed on Japanese stocks. The Nikkei and Topix fell by more than 2%. Itis the biggest decline since last October. Outside of China and Hong Kong, the other large regional bourses fell. Australia's ASX 200 tumbled by 1.8%, the most in nearly a year. Europe's Stoxx 600 is off by 0.4%, threatening the three-day advance in the second half of last week. US index futures are nursing small losses. Japan's 10-year yield rose 2.5 bp, and at 0.75%, is approaching the year's high. Core European benchmark yields are mostly slightly softer, while the peripheral yields are a little firmer. UK 10-year Gilt yields are off a couple of basis points. The 10-year US Treasury yields is little changed near 4.07%. Gold is consolidating after approaching $2200 before the weekend. It has held above $2176 today. April WTI fell to a nine-day low near $77.25 today before recovering. It is near session highs now near $78.30.
Asia Pacific
China reported February CPI and PPI over the weekend. Deflation in consumer prices ended for the first time since last August as the CPI rose by 0.7% year-over-year. It was twice the gain economists expected (0.3% median forecast in Bloomberg's survey). While conventional wisdom attributes the gain to spending over the Lunar New Year holiday, given the construction of China's CPI basket, food prices are key. Food prices fell 0.9% year-over-year in February after a 5.9% decline in January. Pork, a staple in diets, rose by 0.2% in February following a 17.3% drop in January. Excluding food and energy, China's core CPI stood at 1.2% in February, up from 0.4% in January. On the other hand, deflation in producer prices deepened to -2.7% from -2.5% previously. On the month, producer prices fell by 0.2%, matching the January decline....
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