Nothing is going on this morning that did not already happen at 8:30:01 am on Friday. As a result, the three robots who are the sole churners of stocks this AM will keep risk where it was just after NFP, because that is part of the new regime, one in which USD weakness is now stock weakness, and one where stocks have a ways to drop before NEW QE is greenlighted. Also with Europe offline all day, the robots won't even be able to frontrun the European close. Bank of America summarizes the lack of events shaping the market this morning.
Market action
Markets are responding to last Friday's softer-than-expected US employment report. Asian equities fell for the fourth day in a row, the longest string of losses since November. The MSCI Asia Pacific Index dropped 0.6% on the day, following a 1.3% drop the week prior. The Nikkei, Korean Kospi and Indian Sensex were all off roughly 1.5%. European equity markets are closed. At home, equity futures are in the red; the Dow is set to open with a triple-digit loss.
Bonds rallied sharply on Friday in the wake of the jobs report, with yields on the 10-year Treasury note down 13bps to 2.05%. This morning, bonds are trading flattish across the Treasury curve. Meanwhile, the US dollar is steady this morning, after falling 0.2% on Friday.
Commodities are cooling on the softer demand backdrop and after Iran agreed to resume talks about its nuclear program. WTI crude oil is off $1.50, to $101.80 per barrel. In the industrial metals complex, copper is down to its lowest level since February, down 1.3% in morning trading.
Overseas data wrap-up
China's CPI inflation accelerated to 3.6% YoY in March from 3.2% in February, firmer relative to the 3.4% estimate penned by the consensus. CPI inflation in China was upwardly biased in January and downwardly biased in February, due to the timing of the Chinese New Year. Taking the average over January and February yields a YoY inflation reading of 3.9%, implying that CPI actually eased somewhat in March.
The week ahead: Inflation trifecta
This week, it's all about inflation. We'll be getting import prices, producer prices, and Friday's CPI report, which is the main event. We are expecting a 0.2% increase in core CPI inflation, with the YoY rate steady at 2.2%. On the policy front, there is a conference hosted by the Atlanta Fed on financial reform. We'll be hearing from a bevy of Fed officials, including Chairman Bernanke.