ntraday markets continue to be tricky to characterize, and that remains the case as we head into the weekend. US yields have lost some steam as we head into the weekend, giving some reprieve to risk assets. European equities are trading higher, while the DXY Index is flat after failing a test of 100 overnight. FX is mixed, though we would be cautious of reading into intraday moves, given lower liquidity conditions and risk reduction.
We expect EUR assets to struggle into the weekend, with the first round of the French presidential election on Sunday – Macron and Le Pen are expected to go through, but recent polling suggests some risk premium is certainly warranted. Hawkish ECB minutes seem significant in the view of our strategists – ECB speak overnight was not relevant and we expect limited headline risk from ECB’s Stournaras, Makhlouf, and Herodotou speak at 07:30 EDT. When we look at other central banks, INR saw a hawkish surprise due to a “stealth hike” while RUB saw a surprise 300bps rate cut. HUF CPI came short of expectations at 8.5%YoY while we wait for CAD payrolls report which won’t derail BoC expectations. CLP and BRL see inflation print releases as well.
OVERNIGHT NEWS
# Dollar index inches towards 100.00, Euro and Yen offered, RUB extends gains. US 2s/10s re-flattens to 14bp from 21.6bp post FOMC minutes. 10y OAT/Bund consolidates at 55bp, Macron poll lead over Le Pen shrinks before round one of French election on Sunday.
# ECB call change: SG economics forecast QE to end in June, 25bp increase in depo rate in September and December.
# Day ahead: ECB speakers De Cos, Panetta, Stournaras, Makhlouf. Canada employment, CPI for Hungary, Russia, Brazil and Chile.
# India: RBI keeps repo rate on hold at 4.0%, raises FY23 inflation forecast to 5.7% from 4.5%, lowers GDP forecast to 7.2% from 7.8%. 10y INRGB yield +10b, scales 7.0% for the first time since June 2019.
# Nikkei +0.36%, EUR 10y IRS unchanged at 1.34%, Brent crude -0.3% at $100.3/b, Gold -0.2% at $1,930/oz
Macron leads but close call for round one of French presidential election on Sunday (Ifop 4-7 April)
Latam currencies ended the session mixed as BRL, CLP, and COP were weaker, while MXN and PEN strengthened during the session. This was amid a slightly stronger US dollar. BRL led the weakness, depreciating 0.9% to 4.76, CLP depreciated 0.7% to 806, and COP weakened 0.5% to 3769. These were amid no major domestic catalysts. After several weak sessions due to domestic protests, PEN recovered slightly, appreciating 0.5% to 3.70. MXN ended the session mostly flat.
In local rates, most curves shifted higher alongside US rates. In Mexico, the TIIE curve bear-steepened 5bp in 2s10s to -20bp, while the 10y ended the session 6bp higher at 8.50%. In Brazil, rates were 11-15bp higher across most of the curve. January 2025 DI ended 11bp higher at 11.55%. In Chile, the belly of the CLPxCAM curve underperformed with the 5y 12bp higher to 6.66%. In Colombia, COPxIBR shifted 12-18bp higher across the curve, with 10y rising 18bp to 7.71%.