Treasuries: The Dog That Did Not Bark

Overview: Like the dog that did not bark, the long-term US yields tumbled despite data that confirms the acceleration of the US economy and labor market. The10- and 30-year bond yields fell by the most since the end of February (~8.5 bp) and are little changed today. European benchmark yields are 2-3 bp higher. The greenback finished mostly softer, even though the euro and Canadian dollar nursed small losses. It is mixed today against the majors, and the euro and Canadian dollar are among the firmer currencies, while the Antipodeans and sterling are softer. The Russian ruble is recouping yesterday's sanction-inspired drop. The other large, liquid, and accessible emerging market currencies, like South Africa, Turkey, and Mexico, are seeing their currencies trade heavier. However, the JP Morgan Emerging Market Currency Index is higher for a fourth consecutive session. Similarly, both the MSCI Asia Pacific Index and Europe's Dow Jones Stoxx 600 are also higher for the fourth consecutive session. US futures have drifted a little lower. Gold is firm near $1772 its best level since late February. Crude oil is trading higher for the fifth consecutive session. June WTI climbed to nearly $64 a barrel, having begun the week below $60.  

Asia Pacific

The optics may be breath-taking. The world's second-largest economy grew by 18.3% year-over-year in Q1, but of course, this is due to the favorable comparison. On the quarter, the economy disappointed, with a 0.6% expansion. Bloomberg's survey showed a median expectation of 1.4%. Even with the upward revision in Q4 20 to 3.2% from 2.6%, China's economy did not perform as well as expected. Still, some of the details were promising, and better growth is expected here in Q2 (the median forecast is for the economy to expand by about 1.4%quarter-over-quarter). March retail sales were stronger than expected (34.2% year-over-year), while industrial output missed with a 14.1% increase (median forecast was for 18.0%). Fixed asset investment was also slower than in February and less than expected at 25.6%. Steel and aluminum production was at record levels in March, and pork production rose by 32% in Q1. The surveyed unemployment rate slipped to 5.3% from 5.5%. It was at 5.1%-5.2% at the end of 2019.

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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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