Eurozone (11:00 CET) Industrial production for Mar. expected at -2.0% MoM
Global stocks rose in relative calm after Jerome Powell again pushed back against speculation of more aggressive interest-rate hikes. Japan, China and Hong Kong helped an Asian share gauge climb more than 1%. US and European contracts advanced after a volatile S&P 500 session. Treasuries retreated. Brent rose.
Crypto took a breath. Tether recovered and Bitcoin traded above $30,000. Terraform Labs halted, restarted and then halted again its Terra blockchain. US money markets have so far been resilient to the turmoil in stablecoins, which are backed by assets like Treasury bills, but investors fear that if redemptions get big enough they may rattle markets for underlying assets. JPMorgan said regulations may come sooner and be more stringent than thought, with issuers having to park cash at the Fed.
The BOE may have to hike interest rates further than investors expect. Karen Ward, a former UK Treasury adviser, said the usual transmission mechanism by which rate rises tame price growth has been weakened by the pandemic-era build-up of savings and the rush to lock-in low mortgage rates. On that note, the bank is facing an unusual bout of political criticism, the FT reported. Senior Tory MPs turned on the BOE for failing to contain inflation.
Russia will likely step up defenses along its border with Finland if the latter goes ahead with plans to join NATO, the Russian ambassador to the EU said. G-7 foreign ministers vowed to break a Russian blockade of grain in Ukrainian ports. Some EU nations are pushing to delay a ban on Russian oil so they can proceed with the rest of a proposed sanctions package if the bloc can't persuade Hungary to back the embargo.
Wheat futures extended gains after closing near the daily maximum allowed in Chicago following the USDA's prediction that global supplies in the coming season will dwindle to a six-year low. Production in Ukraine will fall by one-third compared with last year, and other major producers are battling drought, floods and heatwaves. US farmers have abandoned the most winter wheat in two decades.
Robinhood soared 24% postmarket after a filing showed that crypto billionaire Sam Bankman-Fried bought a stake. Twitter announced a hiring freeze and other cost-cutting efforts. Nomura started offering Bitcoin derivatives in Asia this week. "Once the dust settles, valuations will become more attractive," said Tim Albers, head of forex structuring. Hong Kong tycoon Li Ka-shing's private investment firm is opening a Singapore office. Deutsche Telekom's non-US operations will be in focus when it reports before the open.
Valuations of European banks are sliding so much that a lot of bad news may already be priced in. The Stoxx 600 Banks Index forward PE ratio has dropped to near 7 times, a level only broken twice during the past 10 years. European banks have become a proxy for recession fears, with the index down 24% since hitting a more than three-year high on Feb. 10.
Jerome Powell acknowledged having been behind the curve in tightening policy, saying, "It probably would have been better for us to have raised rates a little sooner." Both he and San Francisco Fed chief Mary Daly reiterated support for raising rates by 50 bps at each of the next two meetings. He was speaking after the Senate voted to confirm him for a second four-year stint as Fed chair in an unusually bipartisan 80-19 vote.
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