Citi

Reports that US President Biden could almost double capital gains tax for those earning over USD1mn saw risk assets turn lower in yesterday’s NY session, with S&P for example ending 0.9% lower, erasing prior gains post a jobless claims beat. The USD also turned bid, but in Asia we are seeing mild retracements of the moves in NY as we head into the weekend. In terms of next risk dates, we should get more clarity on Biden’s plans here as part of his American Families Plan in an announcement next week, which is likely at his April 28 appearance in Congress.

RBC Capital Markets

US equity indices closed lower following news of the Biden administration’s plan to raise capital gains tax on the wealthy. The US 10-year yield is testing last week’s lows as the pullback continues. The Aussie dollar leading G10 gains overnight after a strong set of PMI figures and iron ore prices hitting fresh highs. Various pledges have issued from the White House climate summit, but nothing particularly market-moving. In other news, Russia has announced that it will start withdrawing the bulk of its armed forces currently stationed near the Ukrainian border, but the unrelated geopolitical tension over Navalny’s hunger strike remains.

The Gfk UK consumer sentiment index reached a 13-month high in April. India's daily Covid-19 case count is still mounting, but USD/INR has held last week's highs, which suggests a lessening of the direct Covid impact on the currency. Japan’s ‘flash’ PMIs evinced a continued divergence between the recovering manufacturing sector and the languishing services index, and this is unlikely to improve soon with news of an imminent tightening of social restrictions in Tokyo and Osaka among other areas.

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