Market 03/27: Japanese Yen hits 34-year low

USD 43 billion 7Y Treasury auction favorable

• High Yield: 4.185% (market yield before auction: 4.193% | Previous session High Yield: 4.327%) => stop-through 0.8bps

  • High Yield allocation ratio: 63.66% (previous session: 59.81%)

• Bid-To-Cover ratio: 2.61 (previous session 2.51)

• Award components (competitive results):

  • Dealers 69.73% successful bid value from indirect bidders (previous session: 69.57%)

  • Dealers 12.86% from Dealers (previous session: 15.60%)

Asia: JPY weakens as BOJ breaks two-tier system, China recovers industrial profits

Japan: Yen hits 34-year low

JPY down -0.3%, USD/JPY at 151.97 in Tokyo, surpassing 151.95 which prompted government intervention in Oct 2022

• Last week, hedge funds and asset managers held record-high short Yen positions since 2006

• Finance Minister Shunichi Suzuki: “We will take strong measures against excessive volatility…”.

• BOJ's most hawkish member - Naoki Tamura, says BOJ not done raising rates - BOJ to raise rates gradually to normalize policy

Yen weakening was predicted by Viet Hustler ahead of BOJ meeting if BOJ fails to maintain “two-tier system” (balanced interest rate-currency policy system):

1. Either QE with YCC + keep negative rates for another 1-2 months

2. Or stop QE and YCC + raise rates

But ultimately BOJ chose to raise rates and continue QE (while gradually reducing QE).

• Detailed analysis in the article: BOJ's pivot speed after Shunto - impact on global financial markets

China: Industrial profits rebound

• China's industrial profits up +10.2% Y/Y in first 2 months of 2024

• Full-year 2023 profits still down -2.3% due to profit decline in first 7 months of last year.

=> Positive signal from the world's 2nd largest economy

WTI oil price rises as inventories fall

Crude oil report update:

1. API

• Crude: +9.34 million barrels (est. -1.2M barrels) - largest build in 6 weeks

• Cushing: +2.39 million barrels

2. DOE

• Crude: +3.17 million barrels (est. -1.2M barrels)

• Cushing: +2.1 million barrels - largest build since 01/2023

Biden administration added +744k barrels to SPR last week

US crude production unchanged, near record high

Energy stocks fluctuate with crude oil prices, but have significantly outperformed oil prices this month

Crypto Market: SEC wins lawsuit against Coinbase

SEC wins lawsuit against Coinbase after judge rejects motion to dismiss the case:

• The court finds that SEC's evidence is sufficient to proceed with charging Coinbase as an unregistered securities exchange platform.

Today, Coinbase also transfers customer and business USDC balances to Base (Coinbase's Ethereum Layer-2 blockchain launched >7 months ago).

Q4 Earnings Update: GameStop

• Revenue: 1.8 billion USD, down from 2.2 billion USD last year

• Net profit: up from 48.2 million USD last year to 63.1 million USD this year

• EPS: up from 0.16 USD to 0.21 USD this year

• Strong liquidity with 1.2 billion USD in cash, cash equivalents, and short-term securities

GameStop stock drops ~14% after disappointing revenue results and staff cuts to reduce costs

Other news: Fed's massive 114 billion USD loss

1. Fed records largest loss in history of 114 billion USD in 2023

2. Demand for TSMC's advanced 3nm chips - the Taiwanese chip company - surges. Orders from Apple, Intel, and AMD increase sharply.

3. US Department of Justice files lawsuit accusing former Mongolian Prime Minister of abusing position to receive millions of USD through mining contracts, seeking to seize luxury apartment.

4. RobinHood launches new credit card for Gold subscribers in effort to expand personal finance market.

5. Disney agrees to end lawsuit with Florida Governor Ron DeSantis' administration