From Marc to Market, April 4:
Overview: The softer-than-expected ISM services report caught the market leaning the wrong way. Although interest rates had a muted reaction, the dollar was sold. In fact, the Dollar Index saw its second-biggest loss of the year, falling by about 0.50%. ISM services prices paid increases moderated to their slowest since March 2020. Supplier deliveries improved to their best since 2009, suggesting a supply chain improvement. Still, the Fed funds futures shaved the odds of a June hike to about 61% from 66%, but the market feels more comfortable about a July cut, which once again is fully discounted. No fewer than seven Fed officials speak today, but the general message is the same. The official confidence is not yet sufficient for a near-term rate cut. Still, the position adjusting continues today and the dollar is trading softer against the G10 currencies but the Japanese yen and Swiss franc. Most emerging market currencies are also firm. The momentum indicators are stretched and we think consolidation in North America today ahead of tomorrow's employment report is the most likely scenario.
Equities are stronger today. Among the large bourses, only Taiwan fell in the Asia Pacific region. South Korea's Kospi surged by more than 1.2% to lead the advancing markets. Hong Kong and mainland markets were closed. Europe's Stoxx 600 had edged higher and US index futures 0.25%-0.50% better. European benchmark 10-year yields are off 2-5 bp, with the periphery outperforming the core. In contrast, the two- and 10-year Treasury yields are slightly firmer. Gold rose to a new high near $2304 before a bout of profit-taking was seen that pushed it back to around $2290. May WTI is consolidating quietly above $85....
....MUCH MORE
