A look at the day ahead in U.S. and global markets from Mike

Dolan

A week jam-packed with major market events kicked off with

some wild action in Japan's yen during a public holiday there,

with a withering drop in the currency to 34-year lows of 160 per

dollar meeting predictable intervention speculation that

triggered an equally eye-watering rebound.

With no official yen purchases yet confirmed, market chatter

presumed there had been at least some shot across the bow as the

currency's fall since Friday's anodyne Bank of Japan meeting

threatened to go into tailspin. Japan's top currency diplomat

Masato Kanda declined to comment when asked if there had been

any action.

From Thursday's close, the dollar/yen exchange rate had

jumped as much as 2.8% - with implied overnight volatility in

the currency options market topping 17% for the first time this

year. And even though the yen bounced hard on 160 to sit just

under 156 in London, it remains weaker than it was when trading

kicked off on Friday.

Japan's seeming 'benign neglect' of the currency, as

Deutsche Bank described it last week, is understandable given

domestic inflation is largely under wraps, the move is largely

driven by interest rate fundamentals and it's flattering for

Japanese exports and tourism.

But its spur to dollar-denominated energy import prices and

a potential disturbance of the competitive landscape across

Asia's big exporting nations means the Japanese authorities will

likely not want this move to get out of hand.

And yet this week is dominated by one of the major drivers -

an increasingly hawkish Federal Reserve that meets again on

Tuesday and Wednesday amid ebbing hopes for more than one U.S.

interest rate cut this year.

After a series of sticky inflation readings this year, only

35 basis points of Fed easing is now priced for the entire year.

The March release of the Fed's favored PCE inflation gauge

calmed markets a bit as it came in line with forecasts and

showed no further deterioration of early-year price picture.

But it's done little to change the policy outlook - with

this week's Fed signalling likely to remain non-committal while

perhaps nodding to discussions on slowing its balance sheet

reduction.

That may be welcomed by the increasingly agitated Treasury

market - where 10-year yields returned last week to

the danger zone of October/November and the so-called 'term

premium' demanded by investors for long-term risks also flipped

positive for the first time this year.

Yields slipped back a touch on Monday, with the Treasury

this week publishing refunding plans for the coming quarter and

expected on Monday to outline borrowing estimates for the two

quarters ahead.

Most auction sizes are expected to remain unchanged, as it

has already promised, but much of the attention may be on a

likely bond buy back program.

Elsewhere, the week's dominant economic data sweep will be

from the labor market - culminating in Friday's likely

still-robust payroll report for this month.

In the corporate world, another heavy earnings week will see

Wall Street trying to capitalise on what was its best week of

the year last week - aided by big gains for megacaps such as

Microsoft, Alphabet and Tesla.

Amazon on Tuesday and Apple on Thursday top this week's

updates.

And Wall St futures were higher ahead of the bell, as world

stocks continued higher following Friday's gains.

The S&P500 earnings season has picked up steam considerably

from where it was indicated at the start of the month, with LSEG

data showing the blended annual profit gain for the index during

the first quarter now back as high as 5.6% - up from the 5.1%

forecast on April 1.

In company news, Tesla has cleared some key

regulatory hurdles that have long hindered it from rolling out

its self-driving software in China, paving the way for a

favourable result from Elon Musk's surprise visit to the U.S.

automaker's second largest market.

In Europe, shares of Anglo American climbed 2.3%

after Reuters reported BHP