Asian markets turned mixed as the rebound in US stocks somewhat lost steam. At the time of writing, Nikkei is trading down -1.14%. Hong Kong HSI is up 0.37%, China Shanghai SSE is up 0.23%. Singapore Strait Times is up 0.64%. Japan 10-year JGB yield is down -0.0026 but stays positive at 0.028.
Overnight, DOW ended up just 0.39%, S&P 500 rose 0.41% and NASDAQ gained 0.87%. DOW closed above 38.2% retracement of 26951.81 to 21712.53 at 23713.93 for the second day. Rebound from 21712.53, while slightly stronger than expected, could still be a corrective move. But for now, it will likely have a go at 55 day EMA (24311.49) at least.
Developments in US treasury yields were also positive. 30-year yield rose 0.031 to 3.024, above 3% handle. 10-year yield rose 0.012 to 2.728. But 5-year yield dropped -0.012 to 2.599. Strength at the long end will be welcomed by Fed policy makers. But yield curve remains inverted from 1-year (2.602) to 2-year (2.561) to 3-year(2.533).
In the currency markets, Dollar was sold off overnight after a chorus of Fed officials who want “patience” before another rate hike, including Boston Fed Eric Rosengren, Chicago Fed Charles Evans, Atlanta Fed Raphael Bostic. FOMC minutes of the December meeting also reflected the cautious tone. They noted that “many participants expressed the view that, especially in an environment of muted inflation pressures, the committee could afford to be patient about further policy firming.”Also “a number of participants noted that, before making further changes to the stance of policy, it was important for the committee to assess factors,” including risks on growth and the impact of past rate hikes on the economy.
Dollar is the weakest one for the week for now, followed by Sterling and then Yen. Euro and Swiss Franc are the strongest ones.
