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Markets ended the first quarter on a high note. Following Fed Chair Jerome Powell’s cooling of US rate-hike expectations, investor sentiment was boosted by a Wall Street Journal report that US President Donald Trump was considering an off-ramp to America’s participation in the Iran War. The S&P 500 surged 2.85% to 6528.52 overnight, returning above the critical 6500 support level. The US Treasury 10Y yield, which eyed last July’s high near 4.50% last week, retreated to 4.30%. Similarly, the DXY Index, which was retesting last fortnight’s resistance level at 100.5, depreciated by 0.55% to 99.961, returning slightly below the pivotal 100 level.
Despite the bullish close to March, the market remains sceptical on April Fool’s Day. The report about President Trump’s “willingness” to end the campaign in Iran without reopening the Strait of Hormuz may reflect his growing frustration with the unwillingness of allies to commit to his cause. The media continues to report US troops rushing to the Middle East, raising questions about whether the off-ramp is another tactical smoke screen, like the diplomatic hopes that preceded the launch of Operation Epic Fury. While markets are likely to build on yesterday's momentum, a trap remains a possibility for those seeking to overextend their bets into the Good Friday long weekend (for US stock and bond markets), before President Trump’s 10-day ultimatum deadline on April 6.
Quote of the Day
“You can make something big when young that will carry you through life. They were all started by very young people who stumbled on something of unseen value. You'll know it when you hit a home run.”
Steve Wozniak
April 1 in history
In 1976, Steve Wozniak and Steve Jobs found Apple Computer in the garage of Jobs' parents' house in Cupertino, California.
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