Most Asian-Pacific are modestly lower today after Wall Street closed mixed last night as rising bond yields took the value-trade back into fashion. What does that mean?  Thanks to the negative sentiment stemming from rising US treasury yields and the retreat of the US stock market, both Asian and European stock markets continued to hold back. All in all, defensive and tech sectors tumbled while financials, industrials and retail sectors gained.

A surprisingly strong China PMI has failed to lift spirits to the Shanghai and Hong Kong stock market this morning, with the non-manufacturing gauge jumping to 56.3 from 51.4, far greater than expected as new orders surged. The global reflationary story is certainly alive and kicking with a view to the US confidence figures released yesterday. Data out of the Eurozone surprised to the upside and US conference board consumer confidence jumped to 109.7 from 90.4, driven by a strong improvement in both expectations and the current financial situation.

Over to you, Joe

All eyes today will be on the grand unveiling of President Biden’s infrastructure plans, which should entail more investment and another massive boost to the economy and employment. There are reports of the total package totalling up to $4 trillion with the first tranche amounting to $2.25 trillion being announced later today.

Despite the market already getting excited about the plan, passage through Congress and actual implementation will be arduous and time consuming. Sadly nothing comes for free in this world and these grand plans come with a grand price tag too, which is set to come in the form of tax rises to the tune of $1.8 trillion over the next 10 years.

Greenback surged up following the rising yields

The dollar ranked the top three best performing major currencies in Q1 confounding many of Wall Street’s finest, with USD/JPY nearly touching 111 this morning and EUR/USD slumping down to 1.17’s level. The latter is trying to stem a losing streak over the last seven trading days. The 38.2% Fibonacci retracement of its March to January climb comes in at 1.1695 so the zone around 1.17 should provide some floor of support, but bearish momentum in the pair is solid and upward price action remains limited.

Similarly, USD/JPY continues its recent moves but is now heavily overbought and trading outside of the Keltner bands. We mentioned the long-term trendline going back to December 2016 yesterday, so bulls are keen to close firmly above here on the month. Watch out for today’s release of the US ADP jobs report (750k jobs created expected) which may inform the markets on what to expect for the official March employment report on Friday.

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