Futures Storm Higher On Easing Bank Stress, Looming Quarter-End

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by Tyler Durden
Thursday, Mar 30, 2023 - 12:15 PM

US index futures extended their gains for a third day, approaching 4,100 - the highest level in over a month - amid easing concerns around the banking crisis and as investors weighed the likelihood that a peak in interest rates is nearing. As of 730am ET, S&P 500 futures were up 0.5% near session highs of 4,080 while the Nasdaq rose 0.6%. The tech-heavy index is set for its best quarter since 2020, pushing into a bull market Wednesday and closing at the highest level since August in a sign investors are preparing for the Fed to end its interest rate hiking cycle and potentially pivot to looser policy later this year. On Wednesday, the gauge entered a new bull market, rising more than 20% from December lows. The yield curve steepened as the 10Y yield dipped 2bps to 3.54%, while the DXY has resumed its selloff and remains below its 50, 100, and 200dma. Commodities are stronger with all 3 complexes stronger.

Among premarket movers, Philip Morris rose after being raised to overweight from neutral at JPMorgan, becoming the broker’s top tobacco sector pick. Meanwhile, Viking Therapeutics fell as the biopharmaceuticals company offered $250m of shares at a discount. Here are other notable premarket movers:

  • Sprinklr shares gain 14% in US premarket trading after the software company gave a full-year forecast for both revenue and subscription revenue that is stronger than expected.
  • RH shares drop 6.8% after the upscale home furnishings company issued weaker-than-expected full-year guidance for FY23. Analysts were disappointed with the outlook, flagging management’s comments on challenging business conditions being set to continue.
  • Semtech falls 13% after the chipmaker forecast a first-quarter loss, against analysts’ estimates of a profit, while its fourth-quarter adjusted EPS fell short of projections by a penny. Cowen analysts cut their target on the stock, noting a “very difficult” start for the company following the closure of its Sierra Wireless deal.
  • Charles Schwab stock declines 1.9% as Morgan Stanley cut it to equal-weight from overweight, saying that Schwab’s clients are pulling cash out of the firm’s low- interest-rate bank accounts at twice the rate that MS expected.
  • Viking Therapeutics is down 4.3% after launching a $250m share offering at $14.50 each via William Blair, Raymond James.
  • Watch Southern Copper as it was downgraded to equal-weight from overweight at Morgan Stanley, which cited a more balanced risk-reward, with the stock adequately reflecting company’s strong cash generation and consistent returns to shareholders.

The US stocks rally comes after a week of treading water as investors weigh the likelihood of further banking turmoil alongside a slew of economic data and clues from central banks on the path for interest rates. The market is now pricing a dovish pivot by the Federal Reserve, compounded by remarks from Chair Jerome Powell yesterday saying policymakers’ forecasts anticipate one more interest-rate hike, which he subsequently clarified is in reference to the Fed's most recent dot plot and not an actual preview of what the Fed will do. Markets now await core PCE data later today for further clues around the Fed’s next move, even as they expected US rates to drop to 4.3% by the end of the year, around 70 basis points lower than the current level.

“Some investors may be jumping the gun, I would be quite cautious about these signals,said Gilles Guibout, head of European equity strategies at AXA Investment Managers SA. “Yes the Nasdaq may be up 20%, but that does not necessarily mean that we are in a new cycle or that the same risks which weighed just recently have waned." The current rally is built more on expectations than actions, leaving the market vulnerable should central banks disappoint investors, Veyret added.

Market sentiment remains relatively positive, and investor confidence remains high despite the recent turmoil brought by the financial sector, as appetite for risk gets supported by the prospect of dovish pivots from central banks, providing a good excuse to push stock indices higher just before the end of the quarter,” said Pierre Veyret, a technical analyst at ActivTrades.

Citigroup strategists also say markets are being complacent, having ignored recession risks and rallied from October lows on “soft” or even “no-landing” narrative. Based on their model, quantitative strategists including Alex Saunders see recession risks remaining high, with economists still having that eventuality penciled in for the second half.

On the other end, Goldman strategists said investors should buy US growth stocks with high margins, while avoiding low-margin ones even as equity and rates markets are at odds over the likelihood of a recession. If the economy avoids recession, real yields are likely to rise and valuations for growth stocks with low margins are more sensitive to higher yields, strategists including Ryan Hammond and David Kostin wrote in a note.

Meanwhile, global stocks and bonds are moving more closely in line with each other than they have in nearly three decades, providing a headache for fund managers seeking to spread their risk. On a brighter note, correlation among stocks globally is low which should be a good environment for stock pickers, according to Bernstein strategists Sarah McCarthy and Mark Diver.

European stocks rose to their highest level in almost three weeks as financial-stability concerns continue to recede. The Stoxx 600 is up 1% with retail, real estate and banks the strongest-performing sectors. Major EMEA markets are higher, led by Spain with the UK lagging. Preliminary CPI data is printing lower MoM and coming in below expectations. Recent IPOs/Hyper Growth are the best performing single baskets, +2.5%+. Vol is leading, Quality is lagging; Value over Growth; Cyclicals over Defensives. UKX +0.7%, SX5E +1.1%, SXXP +0.9%, DAX +1.0%. Real estate stocks lead European equity gains Thursday, extending the previous session’s rebound, as bond yields slipped and markets trimmed peak interest-rate bets. The Stoxx 600 Real Estate Index was 3.1% higher, with all 34 members of the gauge in the green; the index had risen 2.6% on Wednesday. Here are the biggest European movers today:

  • H&M shares jump as much as 13% after the clothing retailer reported profits that beat consensus estimates, driven by what Jefferies defines as “over-delivery”
  • SSE shares climb as much as 3% after it increased its forecast for full-year earnings, citing the strong performance of its “balanced” business model in a volatile year
  • Petrofac rises as much as 73%, the most on record, triggering volatility halts on the stock in London trading after winning a contract to design and install an offshore wind project
  • Allegro gains as much as 7.7% after Poland’s biggest e-commerce platform’s 2022 results matched guidance seen previously as ambitious
  • Vestas shares jump as much as 6.7%, after the world’s largest producer of wind turbines won its biggest ever onshore order
  • SMA Solar shares rise as much as 18%, the most in more than a year, after the German solar equipment maker increased its Ebit guidance for this year by 30%
  • JDE Peet’s shares fall as much as 4.3% after Mondelez completed the sale of about 7.7m shares in coffee and tea company at a ~6% discount to last close
  • Drax shares drop as much as 12%, the most since May 2022, after the UK power firm’s biomass project was rejected for the nation’s carbon capture and storage program
  • S4 Capital shares drop as much as 10% in early trading with analysts saying its mixed results and guidance point to a slower year ahead
  • BioMerieux falls as much as 3.4% after holder Sitam Belgique offers shares representing about 0.8% of the biotechnology company via Natixis
  • Basler shares slump as much as 18% after the consumer electronics firm released FY23 guidance, which Jefferies said was disappointing on both the top and bottom line
  • Paradox Interactive falls as much as 8.4% after the Swedish game developer was downgraded to a short-term hold from buy at Handelsbanken

Earlier in the session, Asian stocks eked out small gains after a rally in US shares overnight, as investors adjusted their positions ahead of quarter-end and markets continued to digest Chinese e-commerce giant Alibaba’s break-up plans. The MSCI Asia Pacific Index reversed earlier losses to rise as much as 0.2%, led by energy and consumer discretionary shares. Australia advanced on the back of strength in US tech shares, while Japanese stocks dropped as a majority of shares traded ex-dividend. India was closed for a holiday. Chinese tech shares gained, lifting the broader market, as investors turned more positive on the sector. In a conference call Thursday, Alibaba’s chief executive Daniel Zhang said the company would gradually give up control of some of its main businesses.

“Alibaba’s spinoffs announced spark thumping revival of Chinese tech optimism and hopes,” Vishnu Varathan, Asia head of economics and strategy at Mizuho Bank, wrote in a note. “This builds on ‘risk on’-type price action,” he said, while “banking fears are relegated for now.” In a busy day of Chinese earnings, major banks including Bank of Communications and the nation’s largest developer Country Garden reported full-year results. The current earnings season is offering investors clues on China’s recovery path as the world’s second-largest economy emerges from Covid Zero. The Asian regional stock gauge was poised to rise about 3% this quarter, extending the momentum seen in the previous quarter, as China’s reopening and easing bets on the Federal Reserve’s interest rate hikes helped sentiment in the region

Japanese equities fell, halting a three-day rally, as 1,500 Topix stocks traded without rights to the next dividend, shaving 23.5 points off the benchmark. The Topix fell 0.6% to close at 1,983.32, while the Nikkei declined 0.4% to 27,782.93. Out of 2,159 stocks in the Topix, 1,330 rose and 748 fell, while 81 were unchanged. “Japanese stocks are down mainly due to the ex-dividend trading,” said Hirokazu Kabeya, chief global strategist at Daiwa Securities. “Otherwise, the receding concerns around banking situation in the US and Europe, and the slight weakening of yen are actually decent conditions for buying Japanese stocks.”

In FX, the greenback gave up an earlier advance after strengthening as investors digested the latest remarks by Fed officials. The Bloomberg Dollar Index is down 0.2% while the Swiss franc is the best performer among the G-10s, closely followed by the British pound and Australian dollar.

In rates, Treasury yields were steady, following muted trading on Wednesday when the 10-year benchmark moved by the smallest margin in more than a month. Treasuries were mixed with the curve steeper as front-end and belly sectors richen vs Wednesday’s close while long-end cheapens slightly. Outperformance by front-end Treasuries steepens 2s10s spread by more than 1bp; 10-year yields little changed around 3.56% narrowly underperforms bunds and gilts. Bund futures rallied after the the German state of North Rhine-Westphalia reported a notable slowdown in CPI, and then extended gains after Spanish inflation came in lower than forecast. Gains proved short-lived, however, with German bonds now lower on the day.

In commodities, oil rebounded amid the continued disruption to shipments from Turkey; WTI rose 0.8% to trade near $73.60. Gold steadied and Bitcoin rose, trading briefly above $29,000. Spot gold adds 0.2% to around $1,968.

Looking to the day ahead, we get initial jobless claims and the final Q4 GDP revision, from Europe we have the Eurozone March economic, industrial and services confidence data, as well as the German March PPI and the Italian February PPI and unemployment rate. We will also be hearing from the Fed’s Barkin as well as Collins.

Market Snapshot

  • S&P 500 futures up 0.6% to 4,080
  • MXAP up 0.2% to 161.05
  • MXAPJ up 0.6% to 520.59
  • Nikkei down 0.4% to 27,782.93
  • Topix down 0.6% to 1,983.32
  • Hang Seng Index up 0.6% to 20,309.13
  • Shanghai Composite up 0.7% to 3,261.25
  • Sensex up 0.6% to 57,960.09
  • Australia S&P/ASX 200 up 1.0% to 7,122.34
  • Kospi up 0.4% to 2,453.16
  • STOXX Europe 600 up 1.0% to 454.56
  • German 10Y yield little changed at 2.31%
  • Euro up 0.3% to $1.0872
  • Brent Futures up 0.8% to $78.92/bbl
  • Gold spot up 0.2% to $1,967.88
  • U.S. Dollar Index down 0.23% to 102.40

Top Overnight News

  • China's largest oil producer just had its best-ever year. PetroChina made a profit equivalent to around $22 billion in 2022, around two-thirds higher than it earned the year before. That was in part due to the rise in the average oil price despite a fall in the second half. PetroChina's bumper earnings led to a jump in its Hong Kong-listed shares, which closed up 7.8% on Thursday. The shares are now trading at their highest level since October 2018. WSJ
  • Taiwan President Tsai Ing-wen arrived in New York for a two-night stop in the US amid simmering tensions between Washington and Beijing. Tsai said the security of the world hinges on the self-ruled island's fate. China warned the trip will have a severe impact on ties with the US. BBG
  • Spain’s inflation almost halved in a month to 3.1 per cent in March as energy costs dropped, in a possible early sign of a sharp fall in European headline inflation this year. The year-on-year rise in harmonized Spanish consumer prices compared with the previous month’s rate of 6 per cent and was lower than the 4 per cent forecast by economists polled by Reuters. FT
  • Russia’s Federal Security Service said it had detained Wall Street Journal reporter Evan Gershkovich in the Russian city of Yekaterinburg on suspicion of spying, according to reports by the Interfax and RIA Novosti news agencies. NYT
  • The EU’s member states and parliament have clinched a deal on higher renewable energy targets after lengthy negotiations, including carve-outs on nuclear energy following pressure from France. FT
  • The UK is to allow investors to count nuclear energy as a “green” investment. In an announcement on Thursday, the government said it would include nuclear in the UK’s green taxonomy — a system used by investors to determine whether an investment is counted as sustainable or not. FT
  • The White House is planning as soon as this week to recommend tougher rules for midsize banks, according to people familiar with the matter, after the collapse of two lenders earlier this month sent tremors through the banking system. The recommendations are expected to call for new rules from the Federal Reserve and other agencies, including for banks with $100 billion to $250 billion in assets. WSJ
  • Dated Brent — which sets the price for about two-thirds of global supply — is about to be transformed for good as Platts will soon use West Texas crude to help determine prices. The switch, which has been fraught with controversy, comes as the existing benchmark is slowly running out of tradable oil. BBG
  • Blackstone's Steve Schwarzman said the banking turmoil was "caused by people on iPhones and other devices" rather than a wave of bad loans. People heard on social media that a bank might be in trouble and "responded with huge withdrawals in a very short period of time," he said in an interview. Most US banks can withstand the current crisis, which is simply an interim issue, he added. BBG
  • Bank of Japan Governor Haruhiko Kuroda changed the course of global markets when he unleashed a $3.4 trillion firehose of Japanese cash on the investment world. Now Kazuo Ueda is likely to dismantle his legacy, setting the stage for a flow reversal that risks sending shockwaves through the global economy: BBG
  • After the fall of Credit Suisse and its hastily arranged merger with its rival — and the return of former UBS chiefSergio Ermotti — Switzerland sees just one big winner and a lot of losers: BBG
  • Investors are betting one major central bank will successfully navigate the policy tightening required to cool inflation without sending its economy into reverse: the Reserve Bank of Australia: BBG

A more detailed look at global markets courtesy of Newsquawk

Asia-Pacific stocks traded mixed as the region only partially sustained the momentum from the US where the Nasdaq 100 entered a bull market after the recent bond selling slowed and as banking sector fears continued to subside. ASX 200 was higher with strength in tech, mining and financials leading the broad optimism across sectors and amid an adjustment in rate expectations with NAB lowering its peak rate forecast to 3.85% from 4.10%. Nikkei 225 was pressured heading closer to fiscal year-end amid mild upside in Japanese yields and with notable weakness across large transportation/logistics companies. Hang Seng and Shanghai Comp. were indecisive and ultimately faltered despite another substantial liquidity effort by the PBoC with participants digesting a slew of earnings releases and as US-China frictions lingered.

Top Asian News

  • Chinese Premier Li said at the Boao Forum that to achieve greater success, chaos and conflicts must not happen in Asia otherwise the future of Asia will be lost and they oppose taking sides, forming new blocs and a new Cold War. Premier Li also commented that the economic situation in March is even better than in January and February, while they will consolidate the recovering trend of China's economy and promote a continued recovery, as well as roll out new measures to increase market access and improve the business environment, according to Reuters.
  • Spanish PM Sanchez said at the Boao Forum that relations between Europe and China, and by extension between Spain and China, do not need to be confrontational, while he added there is ample room for win-win cooperation and that they must remain partners economically and beyond, according to Reuters.
  • China and Brazil reached an agreement to trade in their own currencies, ditching the US dollar as an intermediary.

European bourses are in the green, Euro Stoxx 50 +1.2%, following soft inflation prints via Spain and the German state's ahead of the mainland figure. Sectors are similarly bolstered with defensives lagging while Retail and Real Estate outperform given H&M and (initially) lower yields respectively. Stateside, futures are firmer though the magnitude is more modest and sees the region holding onto their recent upside ahead of data/Fed speak. Blackstone (BX) CEO Schwarzman says their property investment is in good shape. Google (GOOG) Cloud VP says Microsoft (MSFT) is selectively buying out complainants and "definitely" has a very anti-competitive posture in cloud; criticised imminent deals with EU cloud rivals.

Top European News

  • UK Chancellor Hunt is on course for a clash with BoE Governor Bailey after Hunt refused to rule out watering down post-financial crisis banking rules despite the BoE warning against weakening banking regulation, according to The Telegraph.
  • UK Chancellor Hunt said Britain will not go toe-to-toe with the US and EU by offering billions in green subsidies, according to The Times.
  • ECB's Schnabel said a rise in unit labour costs indicates possible second-round effects on inflation and her suspicion is that the energy impact won't drop out of core inflation quickly, while she also noted that they have not seen general outflow from Eurozone bank deposits, according to Reuters.
  • ECB's Elderson says if the baseline scenario is met, there will be more ground to cover and rates will have to be increased further, adds we are not seeing any movements in the bond markets that give us cause for concern.


  • Dollar broadly softer on the eve of PCE data, as Fed Chair Powell points to dot plots showing one more hike in the cycle, DXY dips below midweek low. between 102.780-340 parameters as month-end positioning persists.
  • Euro wobbles in wake of soft EZ inflation metrics before recovering ground vs Buck on a 1.0800 handle.
  • Pound underpinned by firm UK implied rates and yields, with Cable hovering around 1.2350 and EUR/GBP eyeing 100 DMA just under 0.8800.
  • Franc shrugs off sub-forecast Swiss Kof ahead of speeches from SNB, as USD/CHF approaches 0.9150 from around 0.9200 at one stage.
  • PBoC set USD/CNY mid-point at 6.8886 vs exp. 6.8901 (prev. 6.8771).
  • Brazil's proposed new fiscal rules would target zero primary deficit next year, a primary surplus of 0.5% of GDP in 2025 and 1.0% of GDP in 2026, according to sources cited by Reuters.

Fixed Income

  • Bunds led an initial rally in fixed following the cooler North Rhine-Westphalia inflation reading and thereafter peaked at 136.77 following a similarly 'cool' Spanish figure.
  • Action which lifted USTs and Gilts in tandem to 114.23+ and 1014.47 respective peaks.
  • However, this has since seen a marked reversal which was possibly Gilt/Sonia-led, irrespective of obvious catalyst; as such, core benchmarks are now essentially unchanged on the session ahead of the German mainland and US data points/speakers.


  • Crude benchmarks are bolstered by the softer USD and supportive risk tone following Wednesday's slightly lower settlement; WTI and Brent at the top-end of circa. USD 1/bbl parameters.
  • Specifics have been light for crude and also gas markets, with the latter subdued and featuring Dutch TTF in relative proximity to the unch. mark.
  • Metals are marginally firmer, in-line with the magnitude of US equity futures, deriving support from the USD/sentiment; Citi cuts its 2023 Palladium view to USD 1500/oz (prev. 2025/oz).
  • Specifically, spot gold is at the mid-point of USD 1955-1971/oz boundaries, with the 10-DMA at USD 1970.80/oz capping action thus far.


  • Explosions were heard in the vicinity of Syria's capital of Damascus amid Israeli 'aggression', according to the state news agency.
  • China's Defence Ministry says China's military is willing to work with Russia's military to strengthen strategic communication and coordination.
  • Russia's Federal Security Service (FSB) says a WSJ reporter has been detained for espionage, according to Interfax; WSJ reporter Gershkovich detained in Russia, according to Bloomberg.

US Event Calendar

  • 08:30: 4Q GDP Annualized QoQ, est. 2.7%, prior 2.7%
    • 4Q Personal Consumption, est. 1.4%, prior 1.4%
    • 4Q GDP Price Index, est. 3.9%, prior 3.9%
    • 4Q PCE Core QoQ, est. 4.3%, prior 4.3%
  • 08:30: March Initial Jobless Claims, est. 195,000, prior 191,000
    • March Continuing Claims, est. 1.7m, prior 1.69m

DB's Jim Reid concludes the overnight wrap

Right. I'm off skiing for the first time in nearly 3.5 years tomorrow. Wish me luck for the 14-hour drive. The good news is that Maisie is returning to ski school as her recovery from being in a wheelchair for 14 months continues well. The twins are also doing ski school for the first time. Hopefully learning this early will prevent them having the injuries I've had skiing (5 knee and one shoulder op in last 8 years) after taking it up when I was 30 and thinking I was of Olympic standard. Talking of injuries, I had another back injection under general anaesthetic yesterday and in the theatre, there were about 15 nurses and medical staff for a relatively simple, short procedure. I joked to the consultant that there were far less people in the room when my wife had a complicated, high risk twin birth! So hopefully my body will hold up. See you in a couple of weeks. You'll be in good hands when I'm away.

As I pack my bags, that’s three days in a row now where not much has happened. If this carries on for much longer we’ll soon start to worry about tomorrow’s US core PCE inflation print again and maybe a Fed that will have to keep on raising rates. We also have German inflation today so it’s perhaps a good sign that we’re starting to focus on these type of things again. By the time you read this the first regional number will be out from North Rhine Westphalia. ECB Chief Economist Lane even discussed yesterday how from a macroeconomic perspective recent events were a non-event. He expects the recent turmoil in the financial sector to “settle down”, and that rather than rate cuts “more hikes will be needed” instead.

The worry I have is that policy is still not tight enough to completely tame inflation organically, but starting to get too tight to avoid accidents. Clearly if the accident is bad it can easily cause a big enough economic shock to make a big dent in lowering inflation. Has the last three weeks been a bad enough accident? Well it will almost certainly tighten bank lending standards relative to what would have happened (we think they would have tightened anyway). If that's the worst of it, this could translate to a slow weakening for the economy over several months rather than an immediate shock. If so inflation could stay on the high side for a few months, and it will take a brave Fed/ECB to decide to ignore it and instead focus on the financial stability risks instead if we have a period of calm.

For now we’re back to risk-on. The S&P 500 (+1.42%) closed at above the levels seen before a pretty high percentage of us had ever heard of Silicon Valley Bank 3 weeks ago. At the same time US Treasury yields plateaued across the curve yesterday after climbing steadily, but substantially, since last Friday lunchtime.

In US equity markets, all industry groups were up on the day, driven by strong performance in semiconductor (+2.82%), autos (+2.64%), real estate (+2.34%) and technology hardware (+1.95%). The last of which helped the NASDAQ, which was up +1.79% and set for its best quarter since 2020 if nothing goes wrong in the next couple of days. Toward the end of the US trading session, there was a Bloomberg report that the FDIC was planning on having the biggest US banks shoulder a “larger-than-usual” share of the $23bn cost from the SVB and Signature bank failures. This news saw the S&P Banks index fall -0.8% as the news broke an hour before the US close, but bank stocks fully retraced this move and finished up +1.40% on the day.

Over the pond, the European STOXX 600 climbed +1.30%, driven by similar outperformance in the tech sector which rose by +2.67%, which tied with real estate for the best sector in Europe yesterday. Bank shares in Europe remained resilient as the index rose +1.92% on the day. Looking more closely, UBS rose +3.72% after news that the former CEO was being bought back to manage the recent acquisition of Credit Suisse.

We heard from Fed’s Barr yesterday, who highlighted that the Fed intends to maintain its “meeting-by-meeting judgement on rates” and that “incoming data” will continue to be analysed. With Barr’s comments consistent with the previous messaging coming from Chairman Powell, the expected rate for May’s meeting remained little changed, rising by +0.6bps. For December’s meeting, the implied rate rose +2.9bps, pricing in 58bps of cuts into year-end from the terminal rate priced for May. 10yr Treasury yields traded largely flat on the day, moving between small gains and losses before yields finished down -0.5bps at 3.564%, their smallest move in either direction since the news on SVB broke mid-March. There was a similar story for US 2yr yield, which traded in a 13bp range before finishing up +1.9bps to 4.10%.

Back to Europe and apart from Lane we heard from the ECB’s Kazmir yesterday who emphasised that the members of the governing council had “agreed we will not give guidance about May ECB policy meeting.” Kazmir also stated that the “ECB shouldn’t back down on rates but maybe slow the pace.”

Against this backdrop, the ECB rate priced in by overnight index swaps for the December meeting rose +3.7bps, bringing the expected rate to 3.334% so pricing in just 5bps of cuts by year-end, given the current terminal rate is priced at 3.39% in October. 10yr bund yields rose +3.8bps, while the more interest rate sensitive 2yr yield climbed +6.3bps.

Markets are a little softer in Asia overnight. As I check my screens for one last time for a couple of weeks, the Nikkei (-0.73%) is leading losses with the Hang Seng (-0.50%) also slipping even though Alibaba (c.+1%) is extending its gains after jumping +12% yesterday on news of its major shakeup. In mainland China, the Shanghai Composite (-0.24%) and the CSI (-0.21%) are also lower. Elsewhere, the KOSPI (+0.51%) is bucking the negative trend in early trade. US stock futures tied to the S&P 500 (-0.05%) and NASDAQ 100 (-0.17%) are drifting lower. Yields on the 10yr as well as 2yr Treasury are both up +1bps, trading at 3.57% and 4.11% respectively as we go to press.

Early morning data showed that Australia’s quarterly job vacancies dipped -1.5% in Feb quarter (v/s -4.6% in the November quarter), marking the third consecutive quarter of decline even as it remains above pre-pandemic levels.

We had several data releases yesterday, with pending home sales for February beating expectations to come in at 0.8% (vs -3.0% expected) month-on-month. Pending home sales year-on-year rose to -21.1% from -22.4%. We saw the US MBA purchase index continue its modest pick-up off very weak levels, coming in at +2.9%, although this is down slightly from +3% last week.

We also had the German GfK consumer confidence come in slightly above expectations at -29.5 (vs -30 expected), although still far below average. In France, the consumer confidence index was in line with expectations at 81, down from 82 in February. Data in the UK yesterday spoke to a stronger real economy, as both February UK consumer credit data (£1.41 billion vs £1.2 billion expected) and mortgage approvals (43.5k vs. 41.3k expected) beat expectations. After the data release, we heard from BoE’s Mann who emphasised that the outlook for the UK economy had improved with the lower energy costs, and for the first time called for minimum buffers for LDI funds.

Moving to commodities markets, the deadlock between Iraq and the Kurdish region was on its third day. One of the biggest oil producers in Iraqi Kurdistan, the Norwegian owned DNO ASA, has decided to lower production as the dispute continues and storage space for inventory begins to diminish. This initially led to rally for oil prices with WTI and Brent crude futures over +1.1% midday before the US stockpiles data showed weaker demand. In all, WTI crude futures fell back -0.31% to $72.97/bbl, while Brent crude also fell short of a 3-day winning streak, down by -0.37% to $78.28/bbl. Finally, off the back of the improved risk sentiment, Bitcoin rallied strongly, up +3.96% on Wednesday to break above $28,000 at $28,392.

Now to the day ahead. From the US we have initial jobless claims, from Europe we have the Eurozone March economic, industrial and services confidence data, as well as the German March PPI and the Italian February PPI and unemployment rate. We will also be hearing from the Fed’s Barkin as well as Collins.