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Oracle (ORCL.N): It is expected to raise a total of $45 billion to $50 billion in cash by 2026.Spot gold and silver rebounded quickly, currently trading at $4,864/oz and $83.40/oz respectively.10-year US Treasury futures fell 1 point, and 30-year futures fell 7 points.February 2nd - With Kevin Warshs nomination as Federal Reserve Chairman, market focus has abruptly shifted from short-term interest rates to the Feds $6.6 trillion balance sheet and its fundamental role in the market. Zach Griffiths, Head of Investment Grade Bonds and Macro Strategy at CreditSights, noted, "He has consistently been a vocal critic of the Feds balance sheet expansion." Warsh hopes to fundamentally reverse the trend of asset expansion and push for other reforms. However, this move will face complex challenges, directly impacting not only long-term interest rates but also the core markets upon which large global financial institutions rely for daily interbank lending. If policymakers agree to shrink the balance sheet, the transmission effect in the market could lead to a conflict between the Feds and the governments goals of reducing long-term borrowing costs. This could force the Treasury or other US agencies to become more deeply involved in market management, which will face even greater challenges given the continued rise in total borrowing demand and the already over $30 trillion national debt. PGIM points out that if Warshs predictions are true, then the pressure to regulate will shift to the Treasury.February 2nd - On February 1st local time, Mexican President Sinbaum announced plans to send humanitarian aid to Cuba, including food and other basic necessities, while simultaneously seeking to resume oil shipments to Cuba "through all diplomatic channels" despite US restrictions. On the evening of January 31st, US President Trump publicly stated that he had asked Sinbaum to halt oil shipments to Cuba. On the same day, Mexican Foreign Minister De la Fuente responded that Mexico would not suspend humanitarian aid to Cuba.

US Dollar/JPY Yields May Fall Below 131,000 Ahead of Vice President Joe Biden's SOTU Address

Daniel Rogers

Feb 08, 2023 14:39

 USD:JPY.png

 

At 130.90, the USD/JPY is under pressure, extending yesterday's decline from the highest level in a month. In doing so, the Yen pair tracks the recent decrease in US Treasury bond yields despite a dismal start to Tokyo trading on Wednesday. In recent times, geopolitical concerns have combined contradictory Japan data and Fedspeak to weigh on the market.

 

At the time of publication, rates on 10-year US Treasury notes reversed a three-day increase while retreating from a one-month high of approximately 3.68 percent to 3.67%. The US Dollar Index (DXY) has fallen for the second consecutive day to approximately 103.30. In spite of this, S&P 500 Futures exhibit minor losses, mirroring Wall Street and reflecting a negative sentiment.

 

Japan's trade deficit decreased to -1,225.6B from -1,814.6B expected and -1,537.8B earlier, while the Current Account balance decreased to 33.4B from -1,803.6B and 98.4B.

 

President of the Federal Reserve Bank of Minneapolis Neel Kashkari told CNN, "We may have to maintain higher interest rates for a longer period of time," adding that he does not anticipate a recession. Jerome Powell, chairman of the Federal Reserve, then declared, "Expect 2023 to be a year of large declines in inflation," adding that if data continued to come in better than anticipated, he would certainly boost rates further.

 

Notably, optimism surrounding the Japanese government's wage negotiations with labor leaders in March appears to have fuelled optimism at home. However, China's denial of the Pentagon's request maintains the geopolitical tension at a high level.

 

Traders of the USD/JPY pair should rely on Bank of Japan (BoJ) discussions to target more losses, especially in light of recent hawkish concerns surrounding the Japanese central bank. Today's State of the Union (SOTU) speech by United States Vice President Joe Biden will also be vital to follow. Reuters said prior to the event, "US Vice President Joe Biden will face Republicans who question his legitimacy and a public apprehensive about the country's direction during Tuesday's State of the Union address, which is expected to serve as a blueprint for a 2024 re-election attempt,"


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