Rise and shine everyone.

The big news this morning was the Bank of Japan making no moves at their meeting. While no change in rates were expected, there was a high degree of conviction that they would announce the taper of bond purchases. That has now been pushed back to the July meeting. Governor Ueda said in his press conference that they would lay out a plan for the next one to two years in the next meeting, starting to taper immediately after the decision is made.

The USD/JPY crossed the 158 mark and Japanese equities quickly recovered from their muted open.

The Japanese Yen was not the only one showing weakness. With the USD firming up over the past two days, most Asian currencies were weaker. China’s currency continued to weaken, with the offshore Yuan fixed at its weakest since Jan 19, and the onshore Yuan declining to its weakest level since Nov 16, 2023.

US Equity Futures are pulling back this morning, after yesterday’s mixed close. The Russell 2000 is leading the way lower this morning. The softer-than-expected PPI numbers were mostly driven by lower gasoline prices.

There’s been a lot of speculation that the Fed might still go ahead with two cuts - Sep & Dec, despite the Fed saying otherwise. Looks like the market doesn’t want to believe the Fed even when they are hawkish.

Over in Europe, markets are under severe pressure. French bond spreads are widening relative to their European peers as left-wing parties in France form a new coalition to contest the upcoming elections. The French Finance Minister has warned that a victory for this alliance could lead to an EU exit. SFIL, a local government and export financing agency, has postponed its 5-year green bond offering. Spreads against German bunds and Italian BTPs have widened, causing distress in banking stocks across Europe. The CAC-40 index is underperforming as political uncertainty undermines market confidence.

Commodities actually look slightly better this morning, with Gold leading the way higher. But overall, it’s not shaping up to be a bullish Friday, so please be careful out there.

BofA’s Flow Show

Calendars

(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)