The services Purchasing Managers’ Index (PMI) showed a strong bounce in March, suggesting that the real economy may not align with declining consumer and business confidence. However, optimism about future prospects has fallen to the second lowest level since 2022, indicating some concerns.
US 10-year yields have risen by 7 basis points to reach 4.32%, contributing to an increase in USD/JPY, which has surpassed 150 for the first time since March 2. The rally today has exceeded last week’s high by 92 pips.
Market Volatility And Reactions
Market reactions remain volatile, with potential changes possible from forthcoming news. Further developments are anticipated on April 2.
The services PMI’s rebound in March suggests that broader economic activity remains resilient, despite subdued sentiment among households and businesses. This points to a disconnect between prevailing expectations and actual output. However, declining confidence in future conditions—now at its second-lowest reading in two years—raises doubts about how long this divergence can last.
A 7 basis point rise in the US 10-year yield has played a role in pushing USD/JPY above 150, a threshold not seen in nearly a month. This increase extends the recent upward trend, with today’s movement surpassing last week’s peak by 92 pips. Such a shift in yield levels reflects investor sentiment shifting towards higher-rate expectations, which has in turn fed into currency moves.
Upcoming Market Announcements
Given this backdrop, shifts in market positioning can be abrupt as news continues to shape expectations. The upcoming announcements on April 2 will likely prompt further adjustments, with attention turning to whether incoming data reinforces or challenges current pricing. As seen in past trading sessions, reaction speeds have remained high, requiring a close watch on any new developments.
