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MORNING BID-Carefully, Patiently, Slowly

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·2 min read
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A look at the day ahead from Saikat Chatterjee.

That was effectively the message from Federal Reserve Chair Jerome Powell to investors fretting that an inflation explosion in coming months will continue to drive up bond yields.

His message only calmed markets a tad however, with 10-year U.S. Treasury yields holding just shy of one-year highs and stock markets resuming their fall. As tech continues to get clobbered, Asian stocks fell nearly 2% overnight, with China and Hong Kong leading the way lower.

Powell's words didn't help the tech-heavy Nasdaq as investors continued rotating into cyclicals but the S&P500 managed to snap a five-day losing streak, reversing a 2.3% intraday fall which was the largest so far this year.

But European equities look set for a shaky start. Retail darlings Bitcoin and Tesla are firmly entrenched in bear market territory.

Signs of reflation trades elsewhere too, with copper at 9-1/2 year peaks, the Australian dollar scaling a 3-year high and Japanese ten-year bond yields firmly perched at a November 2018 high.

German Bund yields have so far posted their biggest monthly jump in three years. Key developments that should provide more direction to markets on Wednesday: -Germany's economy grew by a stronger-than-expected 0.3% in Q4 2020 -New Zealand's central bank tempered policy tightening expectations South Africa presents April 2021-March 2022 fiscal year budget U.S. Treasury sells 2-year, 5-year notes German 10-yr Bund auction US new home sales Jan -Lloyds reported a sharp profits fall for 2020 but resumed paying a dividend; Europe's biggest hotel group Accor reported an annual loss; consumer goods maker Reckitt Benckiser posted the strongest sales in its history last year. -U.S. corps: Eaton Vance, Lowe’s, Office Depot, Apache, Nvidia