Archived IMT (2011.04.03)

Japan markets look to build on the gains of the past two weeks, with Nikkei 225 rising 1.8% last week and a whalloping 18% from its March 15th low. Global investors have shrugged increasing uncertainty surrounding Japan's fiscal state, cheering the weakness in the Yen as well as gradual resumption of production among the earthquake-impacted manufacturers. The rally should remain untrack until the latter half of April, when Tokyo earnings season kicks into high gear. In contrast, China markets ended last week marginally lower as anticipation of an impending PBoC rate hike permeates sentiment. First half of April is the likely range for another 25bp tightening of key 1-yr rates and would preserve the pattern of every-other-month policy moves (PBoC began adjustment in October and has since tightened in December and February). Weekly commitment of traders data from the CFTC saw speculators continue to add to their longs in risk-on currency majors. AUD is the most obvious beneficiary, with net longs at multi-year high levels. JPY net-long positioning fell off sharply to +7K contracts - a 5-week low.