BONDS: Modest Bear-Steepener, Budget Tomorrow

 A strong day across the region for some bourses as the USD weakened on Federal Reserve uncertainty with the Hang Seng leading the way. 

With all major bourses enjoying strong gains, Taiwan’s TAIEX was an outlier falling -1.65 as Taiwan Semiconductor Manufacturing Co. shares drop as much as -2.1% after the company’s Arizona subsidiary posted a loss of NT$14.3 billion last year. 

South Korea’s presidential-election front-runner, vowed to lift corporate governance standards and curb malpractices such as stock manipulation in a bid to boost the allure of the nation’s $1.6 trillion stock market.

• In China the Hang Seng rose +1.6% today for one of the biggest gains in the region, with the CSI 300 not as euphoric rising just +0.15%, Shanghai Comp +.30% and Shenzhen Comp +0.99%.
• The KOSPI is having as good a start to the trading week trading flat to where it started, despite the comments from the election front runner. 
• Malaysia’s FTSE Malaysia KLCI fell -0.18% today.
• Indonesia’s Jakarta Composite fell -0.26%
• In Singapore the FTSE Straits Times was a standout rising +1.00%
• India’s NIFTY 50 has had a strong start to Monday rising +0.75%

After rising close to 5% last week, oil prices are lower today driven by a pullback in risk following pressure from US President Trump on the Fed to cut rates and worries regarding the impact of increased protectionism on energy demand. April trade and confidence data will be monitored closely for signs of any early impact. Crude remains well above initial support levels though. The USD is significantly weaker (BBDXY USD index -0.7%) as markets fear political interference in US monetary policy.

• WTI is down 1.5% to $63.69/bbl during holiday-impacted APAC trading today. It reached a low of $63.38 earlier and is now around 10% softer this month with the bearish theme remaining intact. Last week’s rally helped the oversold condition to unwind. Initial support is at $55.12 with resistance $64.49.
• Brent has sold off 1.6% to $66.87/bbl following a low of $66.61. Last week’s 4.8% rise is considered corrective with the trend direction down. Initial support is at $62.00 with resistance at $67.95.
• Talks appear to be progressing between the US and Iran on its nuclear programme, which if successful could result in increased oil exports. Iranian comments continue to support its right to enrich uranium though and the lack of an agreement may result in tighter sanctions, which if enforced would support oil prices.
• The US has suggested that a lasting ceasefire in the Ukraine would allow an easing of sanctions on Russia, which would also add to global oil supplies, but it seems that the Easter truce has not been respected.
• Later the Fed’s Goolsbee appears and the US March leading index is released. Europe remains closed.

Market concerns of political interference in US monetary policy and continued tariff uncertainty have weighed heavily on the US dollar during APAC trading today. The BBDXY USD index is down 0.7% to 1216.10, close to the intraday low, with all G10 currencies stronger against the greenback but especially risk-averse yen, Swiss franc and euro. Risk-sensitive AUD and CAD are underperforming.

• USDJPY is down 1.0% to 140.73, close to the intraday low of 140.62 and below support at 141.00 after breaching 141.62 on Friday, which opens 140.32, 17 September 2024 low.
• EURUSD is just off its high of 1.1529 but is still +1.0% to 1.1512, breaking above resistance at 1.1473 and 1.1495 opening up 1.1555.
• The Swiss franc is 1.0% stronger against the greenback with the pair at 0.8085, its lowest since 2011. EURCHF is little changed at 0.9308.
• GBPUSD is up 0.6% to 1.3377 thus EURGBP 0.4% higher at 0.8606 off the peak of 0.8619.
• AUDUSD has breached resistance at 0.6392 opening 0.6409. The pair is currently up 0.4% to 0.6404, close to the intraday high. However, Aussie is weaker against other major currencies with AUDJPY -0.6% to 90.13 after briefly falling below 90.00 to a low of 89.97. AUDEUR is down 0.6% to 0.5564 after a trough of 0.5555. AUDNZD is -0.4% to 1.0696, still above Friday’s low of 1.0684.
• Equities are mixed with both the S&P & Nasdaq e-minis down 0.9% and TAIEX -1.4% but the CSI 300 is up 0.2% and Straits Times +1.2%. Oil prices are down with WTI -1.8% to $63.53/bbl. Copper is down 0.7% but iron ore is higher at around $99/t.
• Later the Fed’s Goolsbee appears and the US March leading index is released. Japan’s March Tokyo condominium sales print today. Europe remains closed.