With Europe and the UK closed today, it was unclear if the traditional overnight futures levitation would take place as scheduled. To nobody's big surprise, it did, driven as usual by the EURUSD, which rose from an overnight low in the mid 1.27s following news that the Cypriot parliament head wanted to pull his country out of the Eurozone as reported here, but more importantly as that second ramp funding carry pair of choice, the USDJPY fell to the lowest in a month following yet another miss in the Japan Tankan big manufacturer index, touching under 93.30 for the first time since March 6, pushing the Nikkei 225 lower by over 2% - has the magic of Japanese rhetoric finally worn off and is the market finally demanding action instead of hollow promises, threats and simply, words? In China we got a miss in the official PMI data setting up yet another Schrodinger PMI split in Chinese economic growth indicators where the official details once again deteriorating while those tracked by HSBC/Markit are mysteriously improving. Also in Asia, rumblings out of South Korea, which continues to miss on key export and economic growth indicators, that it should cut rates mean the export-driven country is on the verge of joining the global currency warfare at which point the free Japanese lunch is over.
As noted previously, Europe is closed for Easter which means no volume, which means the New York Fed's trading desk will have no problems levitating futures to another all time record close now that every day has to be a record-er close, or else the magic of the ponzi will fail. Below are the key few overnight highlights via Bloomberg:
- Treasuries lower, led by longer maturities, after three straight weeks of gains. EUR/USD little changed at 1.2824, slid at 1.3% last week. Trading could be light today with Europe and U.K. markets closed for holiday.
- Yen gains, reaching 93.28 overnight, as Japan’s Tankan improved less than expected in March while South Korean exports rose 0.4% vs 1.8% median est. and a pickup in China’s output trailed forecasts
- Pessimism among big Japanese manufacturers may make it harder for BoJ’s Kuroda to achieve 2% inflation target as he needs companies to boost spending and wages to help revive growth; BoJ concludes policy meeting on Wednesday
- China’s March new home prices posted the biggest gain in more than two years as buyers rushed into the market ahead of property curbs by local governments, driving real estate stocks higher
- China’s overnight money-market rate slumped the most in a month on speculation cash supply will rise after banks met quarter-end capital requirements
Key economic events today:
- 8:58am: Markit US PMI Final, March, est. 55.2
- 10:00am: Construction Spending M/m, Feb., est. 0.8% (prior -2.1%)
- 10:00am: ISM Manufacturing, March, est. 54.2 (prior 54.2), ISM Prices Paid, March, est. 59.5 (prior 61.5) Supply
- 11:00am: Fed to buy $2.75b-$3.5b in 2020-2023 sector