Asia open: Needle in a haystack

The last trading day before a long holiday weekend can often be volatile, especially considering the combination of month-end activities and important economic releases like the PCE report on Good Friday. Take the S&P 500, for instance; few expected a rally into the weekend; however, to many traders' surprise, the index notched another record high on Wednesday. This rally caps off a strong quarter, with the market surging by 10%. Even underperforming Mag 7 stocks like Apple and Tesla saw gains. However, the artificial intelligence market darling Nvidia experienced a decline due to profit-taking. Still, this resilience of the S&P 500 suggests that market sentiment remains robust despite potential inflation headwinds.

Identifying a specific market driver amid the current conditions, particularly with a long Easter weekend approaching, alongside month-end dynamics and significant upcoming data releases, can indeed be akin to finding a needle in a haystack. The multitude of factors at play can make it challenging to isolate one particular catalyst that is driving market movements.

One clear positive that did catch our eye was the solid performance of the US 7-year Treasury note auction. With a yield almost through the when-issued (WI) yield, coupled with strong participation from indirect bidders in the 70% range, it indicates continued interest in yields at current levels. The low dealer participation and overall successful auction suggest confidence in the market's appetite for longer-term US Treasuries. This positive outcome follows yesterday's successful 5-year auction, reflecting sustained demand for US government debt.