Morning 3-29


LONDON, March 29 (Reuters) – Investors chased a sharp bond market rally this week, ploughing $8.6 billion into global bond funds while they pulled $12.5 billion from equity funds, Bank of America Merrill Lynch (BAML) strategists said on Friday, citing EPFR data.

It was the 12th straight week of inflows into bond funds as bond yields continued to slide across the world with German Bund yields falling back below zero and parts of the U.S. yield curve inverting.

U.S. equity funds saw significant outflows with $7.7 billion pulled from the region, while European equity funds lost $4.8 billion in the week to March 27.Both have been among the biggest flow losers of the first quarter, with $39.3 billion pulled out of European equity funds while $37.6 billion exited the United States. Financials saw the biggest outflows among equity sectors this week, at $1.5 billion, while defensive healthcare and utilities sectors had inflows.

  Positive news regarding trade talks as Mnuchin says this round of talks Concluded and they were Constructive. China’s Vice Premier will be in D.C. next week to continue talks. Shanghai closed +3.2%, CSI 300 +3.86% and NKY +.8% as Optimism spread through markets. Spoos +11 handles NASDAQ +34 Dax + .9%, Stoxx 50 +.8% as 16-19 Stoxx sectors higher led by basic resource and retail companies. This Risk On move weighing on treasuries and Bunds for now, as Long as this week’s lows in yields hold there shouldn’t be much panic today in treasury Complex, Short end of yield curve seeing the biggest adjustment today as 2s and 3s see yield +2.5bps while 30s   higher by less the 1 bps. A bit overcrowded in the long short end trade. A voice from the past Janet Yellen said she does not see fed Cutting rates in 2019 and unlikely to slip into a recession

 Dollar sideways, some action in the Pound as The Brexit saga continues there may be another vote on Brexit deal today or may not thus the gyrations in the GBP. Oil on the Bid this morning headed for   one of the Best quarters in a decade Russia accelerating production cuts(BB). Spoos  higher= oil higher on China trade, Sure I can see that, quarter activity might be playing a role as well .China manufacturing PMI to be released this weekend ,some may be banking on a stronger report  Copper +6 handles +1.6%, Nickel +1.4%, Palladium after scoring two Limit down moves over last 2 days trading higher +2.65%. Reflation trade today! An important crop report today at 11:00, Grains unchanged on day, yesterday lean hogs closed limit down, they closed limit bid on Monday volatility there touch an all-time high this week.

Month End quarter today, April Commodities go First notice, April RBOB and HO expire along with May Brent. Economic calendar shows Core PCE at 7:30 and new home sales at 9:00. Dallas Fed president Kaplan speaks at 9:00 and Governor Quarles (voter) at 11:00.

Risk On theme aided by trade talk optimism

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