Trading Day: The only way is up

World stock markets surged to record highs on Tuesday, fueled by a consistent stream of robust earnings reports from both the U.S. and globally. A significant drop in oil prices, attributed to hopes for peace in the Middle East, further boosted investor sentiment by pushing down bond yields.

The article highlights the U.S.'s unprecedented intervention in currency markets last week to support the Japanese yen. While Washington's commitment to aiding Japan is acknowledged, the move also serves U.S. self-interest, particularly concerning the vast $29 trillion U.S. Treasury market. This intervention could signal an inflection point for the dollar, potentially impacting its strength against other currencies, especially if traders begin to cover their short yen positions.

Major stock indices, including the MSCI All Country, MSCI EM, and benchmarks in the UK, Europe, and the U.S., all hit record levels. Technology stocks saw a notable increase, while energy sectors experienced a slight decline. In currency markets, the dollar rebounded against the yen, though other currencies like the Brazilian Real weakened. U.S. Treasury yields decreased, while Japan's 10-year yield spiked after a weak auction.

Commodities saw oil prices fall sharply by 5.5%, while platinum and palladium prices rose. The article also touches upon the ongoing debate surrounding the Federal Reserve's reaction function, with investors closely watching signals from Fed officials. The potential easing of 'beggar thy neighbor' FX policies across Asia is also considered, contingent on continued peace in the Middle East and falling oil prices.