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Singapore Reverts to 2008 Crisis-Level Monetary Policy

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Singapore delivers a surprise, IEA sees the oil oversupply easing and Bank of England is on deck. Here are some of the things people in markets are talking about today.

Singapore's surprise

The Monetary Authority of Singapore unexpectedly eased its monetary stance overnight, moving to a target of zero percent appreciation of the exchange rate, a policy last adopted in during the 2008 financial crisis. The surprise move by the bank, which is one of the world's only major economy central banks to target the exchange rate rather than an inflation rate, caused the local dollar to drop 1.2 percent, while also dragging down currencies across the region. Malaysia’s ringgit dropped for the first time in seven days while the MSCI Emerging Markets Currency Index fell 0.3 percent. 

Stocks mixed, bonds drop

Equity markets in Asia rose overnight, while European stocks are flat this morning. The MSCI Asia Pacific Index advanced 1.6 percent in the wake of the surprise Singapore move, with the yen trading above 109 to the dollar helping to push Japan’s Topix index 2.9 percent higher. The Europe Stoxx 600 was virtually unchanged at 10:35 a.m. in London, having dropped as much as 0.4 percent earlier. S&P 500 futures were also roughly unchanged. European sovereign bonds declined after the inflation rate for March was unexpectedly revised higher to zero percent. Despite this, and despite political gridlock causing talks on forming a government to go nowhere, Ireland this morning sold 10-year bonds at a record low yield of 0.817 percent. Meanwhile the big datapoint in the U.S. today is the CPI report, which comes out at 8:30 a.m. ET. Economists surveyed by Bloomberg are looking for a 2.3 percent year over year increase in the core measure.

IEA sees end to oil oversupply

The International Energy Agency has said that global oil markets will “move close to balance” as early as the second half of this year as production outside OPEC, particularly U.S. shale oil, falls as prices remain low. The agency, however, sees little impact on supplies if a production freeze deal is struck at the April 17 meeting in Doha between OPEC members and Russia. Oil futures, which earlier fell as much as 2.2 percent were trading 0.3 percent lower at $41.63 a barrel in New York at 10:55 a.m. London time. 

Bank of England

The Bank of England will announce its latest policy decision at 7:00 a.m. ET today, and while there is no expectation of a rate change, investors will look for signs that officials are becoming increasingly concerned over Brexit risks. With polls showing voter intentions split on the outcome of the referendum, the risk is likely to remain a drag on sterling for the coming months. 

Wall Street earnings 

U.S. bank earnings season continues this morning with Bank of America Corp. due to report at 6:45 a.m. ET and Wells Fargo & Co. at 8:00 a.m. ET. Yesterday, JPMorgan Chase & Co. beat estimates in their first quarter results. Both JPMorgan and BofA were among the five U.S. banks that failed to convince regulators that they could go bankrupt without disrupting the broader financial market, while U.S. regulators are looking into how the assessment details found their way into the media

What we've been reading 

This is what's caught our eye over the last 24 hours.

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