CNY

Sentiment is stabilizing in financial markets after a late-Monday surge that saw equity indices jump, Treasury yields fall, and risk-sensitive currencies outperform the dollar. The rally was touched off when the US Treasury said it would need to borrow less than previously anticipated, essentially soaking up less market liquidity than had been feared. According to an updated estimate, marketable borrowing should total $760 billion in the first quarter, unexpectedly undershooting the $816 billion projected at the end of October amid higher-than-anticipated starting cash balances and an improvement in “net fiscal flows” (likely higher tax revenues). Investors remain wary however –...

An escalation in Chinese stimulus efforts is helping boost global asset prices this morning, driving equity indices, commodity prices, and risk-sensitive currencies higher ahead of the North American open. The greenback is weaker, Treasury yields are slipping, and oil prices are holding steady in still-oversupplied markets. In an unexpected step, the People’s Bank of China announced it would lower the amount of reserves banks need to hold against their deposits for the third time in a year, potentially unlocking roughly 1 trillion yuan in new lending capacity. The move, which comes after a raft of securities purchases by China’s “national...