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MORNING BID-Powell under real yield pressure

·2 min read

A look at the day ahead from Sujata Rao

There has been one story in town and that is the steady upwardmove in 'real', inflation-adjusted yields. It's been taking achunk out of some of the most favoured (and most exorbitantlyvalued) assets - the S&P500 just posted the longest losingstreak since end-February, while bitcoin is down more than 10%.

Tech slid heavily too last night in New York.

This morning though, world stocks have inched a touchhigher, led by ebullient commodities, and futures appear to besetting up for firmer sessions across Europe and in New York.Yet there is no denying markets are fearful - how serious isthis? And what will policymakers do?

After ECB boss Christine Lagarde said she was "closelymonitoring" the picture, German real yields eased a tad thoughstill at four-month highs. The wait is now on for FederalReserve chairman Jerome Powell's testimony to a Senate committeeto see if he can reassure markets -- yet again -- on the Fed'sdovish stance.

China's central bank has come through, pledging to supportthe recovery, though in a "targeted" manner.

Meanwhile the dollar is lurking near six-week lows, hit bythe narrowing gap between U.S. and European real yields.

In other news, the United States has crossed the grimmilestone of 500,000 COVID-19 deaths.

In Britain, sterling is headed for $1.41, lifted by economicreopening plans though data showing 5.1% unemployment, in thelast 2020 quarter, shows the poor state of the economy.

Still, Ryanair, Tui and British Airways-owner IAG are up,among Europe's top stocks this morning. EasyJet said flightbookings jumped over 300% and holidays bookings surged by morethan 600% week-on-week on Britain's reopening plans.

Key developments that should provide more direction to marketson Tuesday:-HSBC abandoned its profitability targets, unveiling a revisedstrategy focused mainly on wealth management in Asia; Avivaagreed to sell its French operations for 3.2 billion euros toAéma Groupe; HeidelbergCement sees a good start to 2021-Final euro zone inflation-Bank of Canada Governor Tiff Macklem speaks – 1730 GMT.-Philadelphia Fed non-manufacturing business outlook surveyUS auctions 2-yr notesUS consumer confidence FebUK 30-yr gilt auctionUS corporates: Home Depot, Macy, Thomson Reuters, Allegheny.

(Reporting by Sujata Rao; editing by)