Commodities

MORNING BID-Keep the FAIT

Credit: REUTERS/BRENDAN MCDERMID

The messages from the Fed's minutes could not be clearer. First, despite the blowout March payrolls report, labour markets are nowhere near its threshold for reining in easy monetary policy. And the Fed aims to let inflation average 2% for some time before contemplating any tightening.

A look at the day ahead from Sujata Rao

The messages from the Fed's minutes could not be clearer. First, despite the blowout March payrolls report, labour markets are nowhere near its threshold for reining in easy monetary policy. And the Fed aims to let inflation average 2% for some time before contemplating any tightening.

In short: FAIT or flexible average inflation targeting.

The message seems to have sunk in - 10-year Treasury yields are some 10 basis points off recent highs, a spike in short-dated yields has abated and some of the most aggressive pricing of Fed rate hikes has been scaled back.

Markets will await Fed Chair Jay Powell's appearance at the IMF spring meetings but the minutes have lifted U.S. equity futures half a percent, following Wednesday's records on Wall Street. European stocks are opening higher too, with the UK's FTSE looking to extend its Wednesday run to record highs.

On the economy front, strong German domestic demand lifted industrial orders for the second straight month, hot on the heels of this week's PMI revisions that showed euro zone business activity back in growth.

The fly -- (or the virus) -- in the ointment is of course COVID-19 with infections surging in India, Tokyo set for emergency measures and some evidence of blood clots linked to the Astra Zeneca vaccine.

Key developments that should provide more direction to markets on Thursday:

- Corporates: Holland-based Prosus PRX.AS sold 2% of Chinese gaming giant Tencent for $14.7 billion in the largest-ever block trade; Clothing retailers Asos and Uniqlo reported robust profits, the former seeing an astonishing 275% leap.

- Japan's consumer confidence improved in March.

- G20 finance officials to debate President Joe Biden's minimum corporate tax plan

- Data: Euro zone, UK construction PMI; Euro zone PPI Feb; U.S. weekly jobless numbers

- IMF/World Bank Spring Meetings: World Bank head Kristalina Georgieva, Fed Chairman Powell, and WTO Director General Ngozi Okonjo-Iweala to speak

- ECB: Vice President Luis de Guindos speaks

- Emerging markets: Peru, Sri Lanka central bank meetings

US Treasury Breather?https://tmsnrt.rs/3g2yBwf

(Reporting by Sujata Rao; editing by Dhara Ranasinghe)

((sujata.rao@thomsonreuters.com ; +44 207 542 6176/020 7536 7473/44 7990567646))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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