Equities Stabilizing While The Greenback Remains Under Pressure

Overview: The bond and equity markets are trying to stabilize ahead of the weekend. The dollar remains under pressure. In the Asia Pacific region, Hong Kong, China, and South Korean markets advanced, but most markets could not overcome the profit-taking pressures. Europe's Dow Jones Stoxx 600 is faring better as it tries to snap a three-day decline. It is nearly flat on the week.US shares are trading firmer after yesterday's afternoon recovery that pared earlier declines. The S&P 500 begins today off 0.5% for the week. The US 10-year yield is firm at 1.30%, up almost 10 bp this week. European yields are mostly 1-3 bp higher. Italy's 10-year yield is flat to softer today, but it is up nearly 12 bp on the week, compared with 5-8 bp for the core markets. The Australian and New Zealand dollar are leading today's advance against the greenback. Sterling traded above $1.40, but it is the weakest performer today, rising about 0.2% (~$1.4000) near midday in Europe. This week, only the Swiss franc and the Japanese yen among the majors have softened against the dollar (~0.2% and 0.4%, respectively). Most emerging market currencies are firm today. For the week, the Brazilian real (~-1.0%) and the Mexican peso (-2%) are the weakest performers, while the Chilean peso (~1.35%) is the strongest. Gold fell to about $1760, its lowest level since last July, before stabilizing. If it cannot sustain a move above $1775 today, it will be the seventh consecutive decline. News that the US is open to multilateral talks with Iran may have weighed on oil prices, even though the lifting of sanctions is still some ways off. April WTI traded near $62.30 yesterday and today's low was near $58.60.It rebounded to around $59.60, a little above last week's close, a touch beneath $59.40

Asia Pacific

There were two reports from Japan, January inflation and February preliminary PMI.  At minus 0.6%, both the headline and core rate (excludes fresh food) were in line with expectations and showed an improvement from December. The less deflation reading was aided by the suspension of the government's travel discounts. Excluding fresh food and energy, Japan's CPI rose to 0.1% from minus 0.4%. It is the highest reading since last July. Separately, Japan's manufacturing PMI jumped to 50.6 from 49.8, its best reading since late 2018. However, the services PMI worsened, falling to 45.8 from 46.1. The composite edged up to 47.6 from 47.1

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Read more by Marc on his site Marc to Market.

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