Fed QT taper calms the horses, yen pops again
A look at the day ahead in U.S. and global markets from Mike Dolan
Anxious bond traders seem to have taken solace from the Federal Reserve's surprisingly sharp brake on its "quantitative tightening" process on Wednesday, while the yen capitalized on an easier dollar after what seemed like the second bout of Japanese intervention this week.
It may be thin gruel after a predictably hawkish Fed meeting that showed little inclination toward interest rate cuts any time soon, but the widely predicted Fed slowing of its balance sheet runoff was bigger than many had bargained for and may nod to its sensitivity to bond market angst and banking liquidity.
The U.S. central bank said it would scale back the pace of QT starting on June 1, allowing only $25 billion in Treasury bonds to run off each month versus the current $60 billion.
Helped additionally by Fed chair Jerome Powell batting away any idea that further rate rises were on the table again, Treasury yields have fallen back from the year's highs.
Futures markets nudged up the full-year Fed easing expectations to 35 basis points, though a first cut is still not fully priced until after November's election.
Two-year Treasury yields US2YT=RR recoiled from 5% - hovering just under 4.94% on Thursday - and 10-year yields slipped to 4.60%.
Grappling with a heavy earnings season and some outsize price drops in artificial intelligence stocks such as Super Micro Computers and AMD, Wall Street stock indexes have been in two minds over the Fed reaction - ending in the red on Wednesday but with futures back up smartly ahead of the bell.
Apple AAPL.O tops another blizzard of corporate updates on Thursday.
The dollar took its cue directly from Treasury yields and the DXY index .DXY turned tail from six-month highs.
And just as it started to fall back, the Bank of Japan appears to have struck for the second time this week - sparking a peak-to-trough drop of almost 5 yen, or 3%, on Wednesday.
Much like Monday's $35 billion sale of dollars for yen, there was no immediate confirmation of the action - but traders noted the change of tactics from the authorities in selling the dollar as it was already softening rather than stalling its rise at the 34-year high just above 160 yen earlier this week.
Bank of Japan data suggested on Thursday indicated that they spent between $21 billion and $24 billion on Wednesday to pull the yen low - bringing the total for the week close to $60 billion, the amount it spent during a three-day salvo in late 2022.
But despite the action, the yen continues to widen on the huge U.S.-Japan interest rate gap and dollar/yen was back above 155 on Thursday - suggesting Tokyo may be in for a protracted battle that could quickly use up its estimated $155 billion of dollar deposits.
Atsushi Takeuchi, who headed the Bank of Japan's foreign exchange division during intervention rounds in 2010-2012, said Japan would likely keep intervening to prop up the yen until the risk of speculators triggering a free fall in the currency has been eliminated.
LABOR MARKET
Back on Wall St, attention will quickly switch from the Fed meeting to the labor market and the April payrolls report on Friday.
And on that score, there were some indications on Wednesday that the jobs market is cooling a bit.
Although private sector payroll creation appeared to stay strong last month, other data showed U.S. job openings fell to a three-year low in March and the number of people quitting their jobs declined - signs of easing labor market conditions that over time could aid the Fed's fight against inflation.
An ongoing retreat in oil prices back below $80 per barrel CLc1 will also help take the edge off bond market nerves.
But global forecasters remain in little doubt about the fundamental strength of the U.S. economy.
Showing some significant divergence with other major economies, the OECD's last world outlook said lingering sluggishness in Europe and Japan was being offset by the United States, whose growth forecast was hiked to 2.6% this year from a previous estimate of 2.1%.
In single stock moves in Europe, Danish drugmaker Novo Nordisk NOVOb.CO lost 2.5% despite a first-quarter beat and outlook hike, with analysts pointing to slower underlying growth and weakness in obesity drug sales.
But Standard Chartered STAN.L jumped 7% to a six-month high as the emerging markets-focused lender posted a 5.5% rise in first-quarter pretax profit that beat estimates.
Key diary items that may provide direction to U.S. markets later on Thursday:
* U.S. Q1 productivity and unit labor costs, weekly jobless claims, March international trade balance, March factory goods orders
* U.S. corporate earnings: Apple, Amgen, Conocophillips, Expedia, Moderna, Consolidated Edison, Moody's, Ingersoll Rand, Motorola Solutions, Southern, Intercontinental Exchange, Linde, Regeneron Pharmaceuticals, Cigna, Zimmer Biomet, Dominion Energy, Alliant Energy, Coterra Energy, Stanley Black & Decker, Xylem, Howmet Aerospace, Vulcan Materials, Pioneer Natural Resources, WestRock, Borgwarner, Camden Property, Federal Realty, Digital Realty, Kimco Realty, IQVIA, Teleflex, EOG, Fortinet, Ameren, DaVita, Parker-Hannifin, Pinnacle West, Cummins, Regency Centers, Live Nation, AES, Hologic, Illumina, AMETEK etc
* Bank of Canada governor Tiff Macklem speaks, European Central Bank chief economist Philip Lane speaks
* OECD Ministerial Council Meeting in Paris, Economic Outlook released
* French President Emmanuel Macron meets Japan's Prime Minister Fumio Kishida in Paris
* U.S. Treasury sells 4-week bills
Number of jobs to jobseekers falls https://tmsnrt.rs/3m50wOw
Dollar-yen vs US-Japan yields https://tmsnrt.rs/47bTEUY
Biden and Trump remain locked in tight race https://reut.rs/4bClHi3
Market cap shifts in April 2024: snapshot of the world's top companies https://tmsnrt.rs/47cjbgK
Elderly population projections for China and other countries https://reut.rs/3Wp0DXD
By Mike Dolan; Editing by Alison Williams mike.dolan@thomsonreuters.com
متعلقہ اثاثے
تازہ ترين خبريں
دستبرداری: XM Group کے ادارے ہماری آن لائن تجارت کی سہولت تک صرف عملدرآمد کی خدمت اور رسائی مہیا کرتے ہیں، کسی شخص کو ویب سائٹ پر یا اس کے ذریعے دستیاب کانٹینٹ کو دیکھنے اور/یا استعمال کرنے کی اجازت دیتا ہے، اس پر تبدیل یا توسیع کا ارادہ نہیں ہے ، اور نہ ہی یہ تبدیل ہوتا ہے یا اس پر وسعت کریں۔ اس طرح کی رسائی اور استعمال ہمیشہ مشروط ہوتا ہے: (i) شرائط و ضوابط؛ (ii) خطرہ انتباہات؛ اور (iii) مکمل دستبرداری۔ لہذا اس طرح کے مواد کو عام معلومات سے زیادہ کے طور پر فراہم کیا جاتا ہے۔ خاص طور پر، براہ کرم آگاہ رہیں کہ ہماری آن لائن تجارت کی سہولت کے مندرجات نہ تو کوئی درخواست ہے، اور نہ ہی فنانشل مارکیٹ میں کوئی لین دین داخل کرنے کی پیش کش ہے۔ کسی بھی فنانشل مارکیٹ میں تجارت میں آپ کے سرمائے کے لئے ایک خاص سطح کا خطرہ ہوتا ہے۔
ہماری آن لائن تجارتی سہولت پر شائع ہونے والے تمام مٹیریل کا مقصد صرف تعلیمی/معلوماتی مقاصد کے لئے ہے، اور اس میں شامل نہیں ہے — اور نہ ہی اسے فنانشل، سرمایہ کاری ٹیکس یا تجارتی مشورے اور سفارشات؛ یا ہماری تجارتی قیمتوں کا ریکارڈ؛ یا کسی بھی فنانشل انسٹرومنٹ میں لین دین کی پیشکش؛ یا اسکے لئے مانگ؛ یا غیر متنازعہ مالی تشہیرات پر مشتمل سمجھا جانا چاہئے۔
کوئی تھرڈ پارٹی کانٹینٹ، نیز XM کے ذریعہ تیار کردہ کانٹینٹ، جیسے: راۓ، خبریں، تحقیق، تجزیہ، قیمتیں اور دیگر معلومات یا اس ویب سائٹ پر مشتمل تھرڈ پارٹی کے سائٹس کے لنکس کو "جیسے ہے" کی بنیاد پر فراہم کیا جاتا ہے، عام مارکیٹ کی تفسیر کے طور پر، اور سرمایہ کاری کے مشورے کو تشکیل نہ دیں۔ اس حد تک کہ کسی بھی کانٹینٹ کو سرمایہ کاری کی تحقیقات کے طور پر سمجھا جاتا ہے، آپ کو نوٹ کرنا اور قبول کرنا ہوگا کہ یہ کانٹینٹ سرمایہ کاری کی تحقیق کی آزادی کو فروغ دینے کے لئے ڈیزائن کردہ قانونی تقاضوں کے مطابق نہیں ہے اور تیار نہیں کیا گیا ہے، اسی طرح، اس پر غور کیا جائے گا بطور متعلقہ قوانین اور ضوابط کے تحت مارکیٹنگ مواصلات۔ براہ کرم یقینی بنائیں کہ آپ غیر آزاد سرمایہ کاری سے متعلق ہماری اطلاع کو پڑھ اور سمجھ چکے ہیں۔ مذکورہ بالا معلومات کے بارے میں تحقیق اور رسک وارننگ ، جس تک رسائی یہاں حاصل کی جا سکتی ہے۔
