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2026-04-05 08:32:37
[Weekend Market Recap: Dollar Reigns as Safe-Haven Demand, Europe Suffers Biggest Sell-Off in a Decade, Interest Rate Hike Expectations Resurface] ⑴ Last week, major asset markets exhibited distinct characteristics of risk aversion and divergence. The following is a summary of the weekly trends after the market closed. Trading is currently suspended for the weekend. ⑵ The US dollar bucked the trend and strengthened. Despite the better-than-expected US non-farm payrolls of 178,000 in March, risk aversion remained the dominant factor in the market. The dollar index closed at 100.20, with investors selling risk assets and buying the dollar. The yen, euro, and pound all weakened. ⑶ European assets experienced a sharp sell-off. Goldman Sachs data showed that net selling in March was the third highest in the past decade. Hedge funds shorted global equities for the fourth consecutive month, with a short-to-long ratio of 7.6 to 1. ⑷ Global central banks reduced their holdings of US Treasury bonds to support their currencies. The amount of US Treasury bonds held in custody by the Federal Reserve Bank of New York has decreased by $82 billion to $2.7 trillion. (5) In terms of macroeconomic policy, soaring energy prices are changing the path of central banks. Market expectations for a Federal Reserve rate cut this year have largely disappeared, and several ECB Governing Council members have indicated that a rate hike is highly likely. The Bank of England is also predicted to raise rates in June. (6) Asian currencies are under significant pressure. The South Korean won hit a new low since 2009, and the Indonesian rupiah fell to a historic low. Oil-import-dependent economies are facing a double squeeze from their currencies and inflation.
