- Fed's Williams - important to understand that the dynamics of inflation are complicated
- US stock indices close little changed but well off session lows
- WTI crude oil futures settle at $79.74
- White House: US in talks with China about potential visits from Yellen/Raimondo
- FHLB's debt issuance plunges. Sign of easing bank US crisis
- Dollar buying stalls as market takes a break
- Atlanta Fed GDPNow estimate for 1Q growth rises to 2.2% from 1.4% previously
- New York Fed 1 year inflation expectations rises to 4.7% from 4.2%
- ECB's de Cos: Core inflation in euro zone is expected to remain elevated
- Employment trends for March 1 16.24 versus 116.75 (revised) last month
- US February wholesale inventories rise 0.1% versus 0.2% expected
- The GBP is the strongest and the JPY is the weakest as the NA session begins
- BOJ's Ueda: A small rate hike would not be a big issue for the financial system
A day after the US employment showed a little weak (the lowest level of job growth since the pandemic/private payroll 189K) and a little strong (unemployment rate 3.5%), there was a move higher in the expectations for a 25 basis point hike at the May meeting to 70% from around 45% before the employment report on Friday.
The debt market followed that trend as it continued its move higher with the 2 year moving back above the 4% level to 4.012%. A look at the yield curve shows:
- two year yield 4.012% up 4.0 basis points
- five year yield 3.519%, up 3.4 break points
- 10 year yield 3.4168%, up 3.4 basis points
- 30 year yield 3.628%, up 2.5 basis points
The higher yields and higher expectations for an additional hike by the Fed, pushed the US dollar higher. It is ending the day as the strongest of the major currencies. The JPY meanwhile is the weakest as the Governor Ueda took over the reigns from retiring Gov. Kuroda at the BOJ. The markets see Ueda maintaining a steady policy for now at least with the ceiling for 10 years fixed at 0.50%.
Of course trading conditions were a bit illiquid as all of Europe was closed for the Easter Monday holiday. As a result, after reaching new highs early in the US session, most of the rest of the session was spent retracing some of the moves.
Helping was a rebound in US stocks which took some of the "risk off" selling. Looking the major indices, the Nasdaq index did close marginally lower, but was well off the lows and closed near highs for the day. The Dow industrial average and S&P index each closed higher and near their session highs.
A look at the final numbers in the US stock indices shows
- Dow industrial average rose 101.23 points or 0.30%
- S&P index rose 4.09 points or 0.10%
- NASDAQ index fell minus 3.61 points or -0.03%.
The NASDAQ index was down -163.76 points at its session lows, and was nearly unchanged despite declines in some of the major big Tech stocks:
- Apple fell -1.60%
- Microsoft fell -0.76%
- Google/Alphabet fell -1.83%
- Meta fell -0.62%
Moving higher however, was Nvidia which rose 2.0%
Looking at some of the major currency pairs into the close:
- The EURUSD has rebounded back toward a swing area between 1.08629 and 1.0871. That area will be a barometer for more bullish above/more bearish below going into the new trading day. The 200 hour moving average 1.0893 and 100 hour moving average 1.0911 would be upside targets that would need to be broken to put the bars back in full control. Right now they are battling it out with the sellers against 1.0871.
- The USDJPY traded back above the 100 day moving average for the first time since March 10. That level comes in at 133.398. The current price is trading at 133.54. Moving back below the 100 day moving average would increase the bearish bias for the USDJPY.
