A group of funds has built up a large short position in the Treasury market, and could destabilize the financial system during turbulent times, the International Monetary Fund has said. The funds "may have become systemically important to the Treasury and repo markets, and stresses they face could affect the broader financial system" as they "account for most of the short positions in Treasury futures," the IMF said in a report.

The dollar has climbed by around 9% against the yen this year, and the move has affected global markets. Funds who had bet on the yen have faced losses, and exchange-traded funds that allow US investors to buy Japanese stocks have also suffered. A weaker yen could also deal to trouble in the US Treasury market, as they have become pricier to Japanese investors, and Japan is the biggest foreign holder of US Treasury bonds.

Investors are steering clear of French government debt as the country's public finances worsen. France's budget deficit came in over target at 5.5% in 2023 and the government has hiked its deficit target to 5.1% from 4.4% for 2024. "We're heavily underweight French bonds," said David Zahn, head of European fixed income at Franklin Templeton. "It's really the fiscal situation that concerns us."

The CFETS RMB Index, which tracks the yuan's performance against 24 peers, has risen 2.7% since December and climbed to its highest level in a year this week. The currency's strength is complicating China's recovery and could limit the competitiveness of its exports as other Asian currencies depreciate.

Policymakers worldwide have insisted they are setting their interest rates independently of the US Federal Reserve, but local conditions are being affected by the likelihood the Fed will keep rates higher for longer. This has boosted the dollar, which has influenced other currencies and raised the prospect of currency intervention in some Asian countries, as well as hitting some Latin American central banks' plans.

Consumer confidence in the UK was 6.5 percentage points higher in the first quarter of 2024 compared to the same period last year, its highest level in two years, driven by an improvement in household disposable income, a Deloitte survey showed. The biggest quarterly improvement in sentiment came from those aged 25 to 34. Consumers added they were less confident in their job security than they were at the beginning of the year.

Consumer prices in Japan increased 2.7% in March from a year earlier, a slight decrease from the 2.8% rise in February. Inflation could grow at a faster pace over the next few months if the government ends its utility subsidies at the end of May as planned. Rising inflation could lead to further tightening by the Bank of Japan, which ended negative interest rates in March.

China is embarking on a capital market reform plan aimed at ending speculative boom-and-bust trading. The Nine-Point Guideline includes measures aimed at encouraging dividend payments, improving new stock offerings and closing corporate governance loopholes. Investors hope the plan will help boost the country's struggling stock market.

ISDA published a whitepaper from ISDA Future Leaders in Derivatives (IFLD), its professional development program for emerging leaders in the derivatives market. The whitepaper, GenAI in the Derivatives Market: a Future Perspective, was developed by the third cohort of IFLD participants, who began working together in October 2023. Click here to read the press release.

This paper outlines the critical role of interest rate derivatives in supporting the development of financial markets in emerging market and developing economies (EMDEs). Click here to read the full paper.

ISDA has announced that it is extending its Digital Regulatory Reporting (DRR) initiative to several additional jurisdictions, enabling firms to implement changes to regulatory reporting requirements cost-effectively and accurately, reducing the risk of regulatory penalties for misreported data. Click here to read the press release.