It could be a case of laggy data, and to be sure market attention is on whether banks tighten up lending in the wake of last month’s confidence wobbles, and on how and when that would flow through to the real economy of jobs, wages and spending.
Earnings for Citi, Wells Fargo and JP Morgan Chase & Co later in the week will be in focus for colour on financial conditions. Inflation figures due Wednesday can also help markets to gauge how aggressive the Federal Reserve may need to be.
Yet in the meantime a measure of confidence is coalescing around the U.S. interest rate outlook. Friday’s jobs data lifted yields, but didn’t substantially shift a bigger picture view that hikes are all but finished and cuts are coming.
Futures pricing implies one more 25 bp hike is likely in May and that it won’t stick – the entire U.S. curve from three months to 30 years is below 5%, the upper reach of the current Fed funds target window.
In Asia, markets that were open in holiday-thinned trading nudged higher, shaking off, for now, a round of sabre rattling across the Taiwan Strait.
China is running military exercises in the wake of Taiwan’s president visiting the United States, while the U.S. scrambles to find the source of a damaging document leak.
Australia, Hong Kong and most markets in Europe were closed for Easter Monday.
/cloudfront-us-east-2.images.arcpublishing.com/reuters/VCXS22UNCBJXHKJWIKUARV5ZIM.jpg "Have payrolls resurrected the 'soft landing'? 29")
