US Session (11/04/2021)

Stocks rose to a new high as traders reduced their expectations on the Fed's rate of tightening, while bond yields fell.

The S&P 500 was led higher by technology and retail stocks, while the NASDAQ 100 extended its winning streak to a ninth straight day, the longest since December. A positive outlook from semiconductor giant Qualcomm contributed to evidence that the industry's squeeze is lessening. Short-maturity Treasury yields fell as global investors reviewed the future for monetary policy after the Bank of England defied expectations by leaving interest rates unchanged.

The decision came after weeks of speculation that the BoE would be the first major central bank to boost borrowing costs since the pandemic began. It also occurred a day after Fed's Powell announced the beginning of a pullback in asset purchases while indicating policymakers may be patient with rises. Interest-rate futures contracts, which had priced in two quarter-point increases in 2022, pushed the second one into 2023.

"We thought the amount of market pricing for Fed hikes really around the middle of next year was very full, and that should come down," said Mark Cabana, head of US rates strategy at Bank of America Global Research.

Saudi oil output will top 10 million barrels per day for the first time since the pandemic, according to al Arabiya TV.

OPEC+ decides to ease cuts by 400k in December - sources.

JMMC supports no change to OPEC policy of easing cuts by 400k BPD - sources WTI weakened

Traders push out the first 15bps BoE hike to February and see 1% in September.

BoE Gov. Bailey warns on the scale of rate wagers viewed in markets.

Bank of England (BoE) Definition

Asia Session (11/04/2021)

The global stock rally came to a halt in Asia due to a drop in bond yields, which was sparked by lowered expectations about the anticipated pace of monetary policy tightening to combat inflation.

Stocks declined in Japan, Hong Kong, and China, where the central bank increased the amount of short-term currency injected into the banking system.

Investors in China are keeping an eye on Kaisa Group Holdings for the next spark in the property market. Shares in the company and its units were banned in Hong Kong, a day after the developer warned of liquidity problems and missed payments on wealth items it insured.

US futures fell after technology stocks set a new high on Wall Street. Highlights from the firm included an earnings beat from Airbnb, a disappointing Uber outlook, and a drop in Peloton shares as a pandemic sales boom fizzled.

US treasuries and the currency continued to rise. Interest-rate futures had priced in two quarter-point Fed Reserve rises in 2022, but the second one was pushed out to 2023. The Fed's chair, Jerome Powell, stated this week that the Fed may be patient with raises. A surprise move by the BoE to maintain interest rates resulted in a global bond rally as investors evaluated the outlook for borrowing costs.

Europe Session (11/04/2021)

As investors assessed the Fed's patience with interest-rate rises against the possibility of persistent inflation and declining global growth, the US dollar along with treasuries and stocks rose.

The dollar climbed against all of its G-10 counterparts, bringing the euro closer to year-to-date lows. The yield on the 10-year US Treasury note fell 3 BPS. Meanwhile, equities defied bond market caution, bringing a global stock index to a new high. On bullish projections, technology companies were back in favor throughout the world, with Qualcomm leading pre-market gains in New York.

While announcing a stimulus-tapering plan, Fed members emphasized that they are not in a rush to raise interest rates, despite the fact that inflation may remain high for months. While this encouraged stock market risk-taking, a second-day reality check developed in the bond and currency markets. The tug-of-war between dovish central banks and markets pricing in faster-than-expected rate rises appeared to continue.

China: We are making progress in opening our border with Hong Kong.

The US is requesting OPEC+ to increase supply by 600k-800k BPD - Delegate

China’s Pres. Xi: China will expand international shipping cooperation.

ANZ: The RBA will complete QE in May 2022 and hike rates in H1 2023.

Friday FX Option Expiries

USD/JPY: 113.70 ($1.61B), 114.50 ($965.1M), 115.00 ($916M)
EUR/USD: 1.2950 (EU872.6M), 1.1560 (EU732M), 1.1575 (EU705.4M)
USD/CAD: 1.2500 ($728M), 1.2375 ($565M), 1.2400 ($410M)
AUD/USD: 0.7500 (AUD484M), 0.7215 (AUD438M), 0.8400 (AUD418.9M)
EUR/GBP: 0.8550 (EU538M), 0.8525 (EU404.7M), 0.8440 (EU400M)
USD/KRW: 1160.00 ($400M)