Volatilities in US equities continued overnight with DOW closing down 266.96 pts, or -1.62% while S&P 500 closed down -39.1 pts or -2.09%. Nasdaq also dropped -129.79 pts, or -3.1%. Both S&P 500 and NASDAQ made new lows while Dow 30 is staying in recent range. Treasury yields seemed to be finally gather momentum with 30-year yield closing at 3.503 while 10-year yield closing at 2.628. Asian equities followed with, in particular, Nikkei 225 dropping over -300 pts and broke 14000 handle to a six-month low. Risk aversion sent AUD/USD and CAD/USD mildly lower against dollar. And, the greenback stays weak against EUR/USD and USD/CHF. However, risk aversion had little impact on USD/JPY crosses as they're mostly stuck in tight range.
ECB president Draghi said yesterday that the central bank is "resolute in its determination to maintain a high degree of monetary accommodation and to act swiftly if required". He noted the governing council "does not exclude" further policy easing while interest rates are expected to stay at present or lower levels for an extend period of time. He confirmed that "recent information remains consistent with our expectation of a prolonged period of low inflation". But he remained confirmed that inflation will climb back to the 2% target towards the end of 2016.
Meanwhile, IMF European deputy director Pradhan said that for Eurozone to maintain an accommodative monetary stance, ECB will need to expand the balance sheet. And, "most unconventional policies we can think of would involve expanding the balance sheet." Meanwhile, whether there is probability of deflation, Pradhan said "inflation is low enough to worry about the adjustment in euro-area economies that have high debt burdens."
On the data front, China CPI dropped -2.3% yoy in March while PPI rose 2.4% yoy. Germany CPI will be released in European session. US will release PPI and U of Michigan sentiment.