Morning Bid: Yen slips anew with Amazon due, Treasury plans irk
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[April 30, 2024] A
look at the day ahead in U.S. and global markets from Mike Dolan
World markets stalled on Tuesday as another heavy earnings week for
megacap stocks cranked up, with renewed slippage in Japan's yen and U.S.
Treasuries eyed closely in the background.
Major macro market moves are likely in check for now as the Federal
Reserve starts its latest two day policy meeting - with Wall Street also
eyeing first quarter results from two more top ten world caps Amazon and
Eli Lilly.
News of a larger U.S. Treasury borrowing slate for the coming quarter
than previously estimated unnerved the bond market a touch overnight.
Blaming lower cash receipts, the government said late Monday it expects
to borrow $243 billion in the second quarter - some $41 billion more
than it said in January.
But currency markets remained focused on the fate of the yen as it fell
again earlier on Tokyo's return from Monday's public holiday - during
which suspected official intervention lifted it from a trough of 160 per
dollar.
As the Nikkei stock benchmark jumped more than 1% on its return from the
long weekend, the Japanese currency weakened almost a full yen from
Monday's New York close to within a whisker of 157 - almost 1% down from
levels seen before Friday's Bank of Japan meeting and despite
yesterday's wild swings.
Without confirming Monday's intervention, Japan's top currency diplomat
Masato Kanda said on Monday that 'speculative, rapid and abnormal' yen
moves could not be overlooked and on Tuesday said the authorities were
ready to act around the clock.

"We are ready 24 hours, so whether it's London, New York or Wellington,
it doesn't make a difference," he told reporters.
Kanda also said finance ministers of Japan, China, South Korea and ASEAN
countries will meet on the sidelines of the upcoming Asian Development
Bank's annual meeting in Tbilisi, Georgia.
Whatever the merits or otherwise of the yen's accelerating fall to
34-year lows for Japan's own economy, there's some trepidation that it
may upend the competitive landscape across Asia's major exporting
nations and South Korea and others are watching closely.
To that end at least, China continues to hold the yuan relatively stable
against the dollar - although its recently buoyant stock markets wobbled
a bit again Tuesday after a mixed set of monthly business surveys showed
a slowing of activity there in April.
China's Politburo, a top decision-making body of the ruling Communist
Party, said on Tuesday it will step up its support for the economy,
flexibly using policy tools that include banks' reserve requirement
ratios and interest rates.
It also said it would coordinate and improve policies to reduce housing
inventories and optimize policy measures for new housing to address the
ongoing property sector bust - though the statement seemed to stop short
of detailing the sort of major initiatives that markets had speculated
about on Monday.
In Europe, the heavy earnings season dominated - but there was some
relief that April consumer price inflation readings for the euro zone
came in as expected at annual 2.4%, core inflation rates ebbed and flash
readings for quarterly growth in the bloc beat forecasts with a 0.3%
expansion.
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A trader works on the floor at the New York Stock Exchange (NYSE) in
New York City, U.S., April 25, 2024. REUTERS/Brendan McDermid/File
Photo

Money markets are more than 70% priced for the first European
Central Bank interest rate cut as soon as June and the euro held
steady.
That's despite the contrast with Fed expectations, where futures now
don't fully price a quarter point off rates until after November's
election.
With the Fed kicking off this week's two-day meeting on Tuesday,
it's widely expected to hold the line again - though there is some
focus on whether it will reveal anything on slowing its balance
sheet rundown of Treasury holdings.
Irked by the 'higher for longer' rates prospect, heavier
second-quarter borrowing plans and even the chance Japan may soon be
a seller of Treasuries to fund intervention to support the yen,
10-year yields nudged higher again on Tuesday to 4.65%.
In company news, HSBC's stock rose 2% after Chief Executive Noel
Quinn said he plans to step down, marking the surprise departure of
a hard-nosed leader who has overseen a raft of asset sales, guided
the lender to record profit and lifted its share price.
A former head of the bank's markets business who was appointed to
the No. 2 role over a year ago, Chief Financial Officer Georges
Elhedery is likely the leading internal candidate for the job.
Back on Wall Street, Tesla stole the show on Monday as its beaten
down shares surged 15.3% after the electric vehicle maker made
progress in securing regulatory approval to launch its advanced
driver-assistance program in China.
Apple, which reports earnings on Thursday, gained 2.5% following a
report the iPhone maker had renewed discussions with OpenAI about
using the startup's generative artificial intelligence technology.
Amazon tops the heavy earnings diary later, with eyes also on Super
Micro Computers for a glimpse of what's happening in the AI world.
Key diary items that may provide direction to U.S. markets later on
Tuesday:
* US April consumer confidence, Chicago April PMI business survey,
Dallas Fed April service sector survey, US Q1 labor costs, Feb
monthly home prices
* Federal Reserve's Federal Open Market Committee starts two-day
policy meeting - decision Wednesday
* US corporate earnings: Amazon, Eli Lilly, Super Micro Computers,
Advanced Micro Devices, Prudential Financial, PayPal, 3M, Marathon,
Mondelez, Coca Cola, Starbucks, Molson Coors, McDonalds, Clorox,
Corning, Edison, Eaton, Amcor, Archer Daniels Midland, Stryker,
Sysco, Hubbell, Pacar, Skyworks Solutions, Incyte, CentrePoint
Energy, Diamondback Energy, Caesars Entertainment, American Tower,
Illinois Tool Works, Republic Services, Essex Property Trust,
Ecolab, Gartner etc
(By Mike Dolan, editing by Christina Fincher, mike.dolan@thomsonreuters.com)
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