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On Wednesday, Asian stock markets are experiencing widespread losses, influenced by the negative trends in global markets. This was triggered by the rise in US Treasury yields due to strong economic data, raising worries about the future of interest rates. The latest data from the US revealed higher-than-expected growth in job openings, manufacturing, and factory orders in February. Equity markets globally are feeling the heat as investors reassess global interest rate expectations ahead of Fed Chair Powell’s upcoming appearance and Friday’s US labor data. Presently, markets are factoring in just under 70 basis points of US rate cuts for the year, slightly below the Fed’s projection of 75 basis points of reductions as per the ‘dot plot’. Despite Fed officials Mester and Daly reaffirming that three rate cuts (75 basis points) remain the baseline, they highlighted that robust economic activity reduces the urgency for immediate easing.With a quiet day in the UK, attention shifts to European and US data. In the Eurozone, Eurostat’s initial estimate is expected to indicate a decline in March inflation to 2.5% from February’s 2.6%, aligning with recent disappointing national data from Germany and France. Core CPI inflation is also expected to hit a two-year low of 3.0% or less. However, the Eurozone unemployment rate, projected to stay steady at 6.4%, will keep policymakers alert to potential wage pressures, suggesting an early rate cut at the next ECB policy update is premature.Stateside, eyes are on a couple of data releases ahead of Friday’s crucial labor market report. Firstly, the ADP employment report, though historically unreliable, is monitored for insights into Friday’s jobs data. Expect an increase of 180,000 for ADP private sector payrolls compared to the expected 225,000 for Friday’s official payrolls. Secondly, the US ISM services survey, a barometer of March economic activity, is expected to show a modest rise to 53.2 from 52.6, maintaining its expansion streak. Market focus also hones in on remarks from Fed policymakers, particularly Chair Powell’s scheduled economic outlook speech. While recent Fed statements have been ambiguous regarding future policy, Powell’s remarks last Friday indicated no urgency for rate cuts. Nonetheless, markets still anticipate a first reduction in June, albeit with less certainty surrounding subsequent moves in the latter half of the year.
Overnight Newswire Updates of Note
(Sourced from Bloomberg, Reuters and other reliable financial news outlets)
FX Options Expiries For 10am New York Cut (1BLN+ represent larger expiries, more magnetic when trading within daily ATR)
CFTC Data As Of 29/03/24
Technical & Trade ViewsSP500 Bullish Above Bearish Below 5220
EURUSD Bullish Above Bearish Below 1.08
GBPUSD Bullish Above Bearish Below 1.27
USDJPY Bullish Above Bearish Below 150.25
AUDUSD Bullish Above Bearish Below .6570
BTCUSD Bullish Above Bearish below 65000
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