Italian debt will sell like hotcakes, and Draghi knows it
Today's selloff in Italian sovereigns will add to the palatability of BTPS because their yields will provide a much-needed source of income to yield-starved investors. This week's 50-year auction showed that the market is not afraid to add on Italian risk to maximize return and build a buffer against rising interest rates globally.
WCU: Commodity markets consolidate with one eye on inflation
The commodity sector remains in consolidation mode with the Bloomberg Commodity index trading close to unchanged for a third week. The modest correction since February has served the market well in bringing down some of the speculative froth, thereby preparing the market for the next leg higher once supported by strengthening fundamentals. One concern for the market relates to China and the risk of tighter monetary conditions being introduced in order to curb rapidly rising factory gate prices.
Podcast: Flying high, but spotting a few fiscal clouds on the horizon
Today we note the continued bid tone in US equities and strong momentum there while strong inflationary pressures in China as shown in a high March PPI reading there overnight suggest policy is to remain tight, restraining sentiment. Looking beyond the near term, one fresh source of longer term concern is the future of US fiscal policy, given evidence that "king-maker" Democratic senator Joe Manchin is against ending the filibuster, which would require difficult bipartisan cooperation if new fiscal measures are to see the light of day. A look at a new basket of Chinese consumer stocks, soaring corn prices, oil, gold, patterns in FX and more. On today's call were Peter Garnry on equities, Ole Hansen on commodities, and John J. Hardy hosting and on FX.
Market Quick Take - April 9, 2021
US equities pulled to new record highs yesterday, and the Nasdaq 100 Index is now also within striking distance of its high-water market from February. The Asian session was rather weak, however, as Chinese stocks remain in a funk. In FX, the US dollar is struggling for support, with EURUSD trying to decide if it is breaking back higher, though much of that has been down to recent, isolated euro strength.