Stock exchanges and the dollar fall on the eve of crucial days

By Mark Jones

LONDON, March 9 (Reuters) – Global markets enjoyed a rare lull on Thursday as they awaited U.S. payrolls data on Friday and U.S. inflation figures on Tuesday that could easily trigger a shock. other cross storms.

* European stock markets started slightly lower, although there was little movement in dollar and bond markets, where recession warnings became increasingly strident again.

* US Federal Reserve chief Jerome Powell remained firm on his message of bigger and potentially faster interest rate hikes during a hearing on Wednesday, but also stressed that the decision would depend on the robustness of the incoming data.

* Financial markets are now pricing the likelihood of a 50 basis point rate hike at the Federal Reserve’s March meeting at nearly 80%, up from 30% earlier in the week. The US central bank is also expected to raise rates to 6%.

* The dollar index, which measures the performance of the greenback against a basket of six currencies, hovered at a three-month high of 105.57 points. However, it was down 0.4% against the Japanese yen at 136.78 to the dollar.

* Meanwhile, the Chinese yuan weakened towards the key psychological level of 7 units to the dollar, after the release of the slowest annual consumer price inflation data in a year fueled doubts on the strength of its economic recovery.

* Two-year Treasury yields were holding near 15-year highs at 5.04%, while benchmark 10-year yields were flat at 3.9953%.

* In particular, the difference between the yields of short-term (two-year) and longer-term (10-year) Treasury bills stood at -108.2 basis points. This is the most extreme reversal since 1981. Reversals are considered reliable indicators of recession.

* Pre-pay caution sent S&P 500 and Nasdaq futures falling 0.3%. Indexes also fell on Wednesday after private payrolls topped consensus estimates and demand for home loans rose despite rising mortgage rates.

* The forecast for Friday’s numbers points to a modest increase of 205,000 jobs, after January’s 517,000 increase led markets to reassess expectations for monetary tightening.

* During the Asian session, the MSCI Asia-Pacific ex-Japan equity index fell 0.6%, after losing 1.4% in the previous session. The Japanese Nikkei, on the other hand, rose 0.6%.

* Commodity prices have mostly fallen. Brent crude fell to $82.45 a barrel, US crude fell to $76.39 a barrel and copper, a metal sensitive to global growth, fell 1%. Gold rose slightly to $1,817 an ounce.

(Additional reporting by Stella Qiu in Sydney and Joice Alves in London; editing in Spanish by Ricardo Figueroa)