From Marc to Market:
After yesterday’s sharp losses, the US dollar is mostly consolidating with a firmer bias against the G10 currencies. The yen is the exception. The unexpected post-election gains have been extended through the local session and the European morning. The very long-end of the Japanese yield curve also extended its counter-intuitive rally, with the 30- and 40-year yields lower for the 5-6th consecutive session. While the dollar appeared to react strongly to China’s warnings about US Treasury exposure, the bond market appears to have largely ignored it. The US 10-year yield has eased below 4.20%, the previous cap, which has closed below only once since mid-January.
The busy week for US data begins today with the import/export prices, the Q4 Employment Cost Index, and December retail sales. Strong auto sales and heavy holiday-discounting likely underpinned consumption. The Atlanta Fed’s GDP tracker estimates that the US economy grew by more than 4% in Q4, for the second consecutive quarter. Meanwhile, the Fed funds futures have a cut fully discounted at the first meeting Warsh will chair if the confirmation hearings are timely and not disrupted by the ongoing investigation of the Powell for misleading Congress over cost overruns of the HQ renovations....
....MUCH MORE
