It Is The ECB's Turn But Little New To Be Said Or Done

Overview: The S&P 500 and Nasdaq gapped higher yesterday to record-levels, and the reflation theme lifted Asia Pacific shares for the third session today. South Korea, Taiwan, and China led the advance. Europe's Dow Jones Stoxx 600 gapped higher and is consolidating, seemingly waiting for fresh directional clues from the US, where a small higher opening is anticipated. The US 10-year yield is steady around 1.08%, while European yields are a little softer. The US dollar is lower against nearly all the major and emerging market currencies today. Sterling, the Norwegian krone, and the New Zealand dollar are jostling for the lead with around a 0.6% gain. The yen and Canadian dollar are laggards. The JP Morgan Emerging Market Currency Index is posting small gains as its advance stretches into the fourth consecutive session. Gold extended its bounce off the week's low near $1805 and made it to around $1875 today before steadying. The $1880 area is the halfway mark of the recent leg lower from near $1960. Oil prices are softer but at the upper end of their recent ranges. March WTI stalled in front of $54 a barrel last week and yesterday and has backed off today to around $52.75. API estimated a small (2.5 mln barrel) increase in US crude inventory, which, if confirmed by the EIA later today, would be the first build of the year.  

Asia Pacific

The Bank of Japan stood pat as widely expected. It shaved its GDP forecast for the fiscal year, ending in March to -5.6% from -5.5%. However, it lifted the forecast for FY21 to 3.9% from 3.6%, and the FY22 GFP forecast was raised to 1.8% from 1.6%.CPI is expected to fall by 0.5% in the current fiscal year compared with a 0.6% decline previously anticipated. Inflation is expected to rise to 0.5% in FY21 (from 0.4% previously) while FY22 was left at 0.7%. The takeaway is the pattern, which will likely be seen by other officials, is the near-term pessimism but the medium-term confidence encouraged by the vaccine.  

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Read more by Marc on his site Marc to Market.

Disclaimer: Opinions expressed are solely of the author’s, based on current ...

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