Top Headlines

At Top of Fed, a Dispute on Policy Picks Up Steam – Reuters
Federal Reserve Chair Jerome Powell’s top deputies are edging toward a clash that could shape the pace of interest-rate hikes in coming months, as well as how the Fed should prepare for and combat the next economic downturn.

Draft League/Five Star Compact Sought Path to Leave Euro – Financial Times(subscription)
Text dismissed by parties as ‘old’ but its ideas highlight potential shock to Europe.

Dollar Near 5-Month Peak After Benchmark Treasury Yield Vaults Above 3 Percent – Reuters
The dollar hovered near a five-month high against a group of major currencies on Wednesday, as a surge in the benchmark 10-year Treasury yield above 3 percent reignited a rally that had lost steam last week.

Euro Zone Braces for Month of Truth From Data in ECB Prelude – Bloomberg
European officials aren’t letting a first-quarter slowdown undermine their confidence in the economy, but an upcoming round of numbers may test their view that the winter blues will pass.

The New Neutral: The Long-Term Case for Currency Hedging – Journal of Investing (subscription)
In this paper, the authors use traditional portfolio metrics to address the question of whether exposure to foreign currency is likely to help, or hinder, investors over the long run.

Hong Kong Steps In to Defend Its Currency Peg Again – Bloomberg
Hong Kong stepped in to defend its currency peg for the first time in almost a month.

CTAs Register Narrow Gains in April – Profit & Loss
The flash estimate for the Barclay CTA Index, compiled by BarclayHedge, indicates a 0.23% gain in April. Year-to-date, the index is down 1.42%.

Regulatory News

House Votes Next Tuesday on Bill Easing Post-Crisis Bank Rules – Reuters
The U.S. House of Representatives will vote next Tuesday on a bill that would relax regulations introduced after the 2007-2009 financial crisis, two congressional sources said.

China’s WeChat Weighs Banker-Friendly Messaging – Financial Times(subscription)
WeChat is in talks about developing a messaging service aimed at allowing international bankers to discuss bond trades with China-based bankers without breaching compliance rules that were implemented in the wake a series of high-profile rate-rigging scandals.

DOJ ‘Sandbagging’ With New Theory In Libor Trial, Judge Says – Law360 (Subscription)
A Manhattan federal judge said Tuesday that she may push the trial of two former Deutsche Bank traders accused of rigging the Libor to September, saying she felt “sandbagged” by prosecutors’ new theories a month before trial.

Volcker Rule 2.0 Draft Coming Soon – Wall Street Journal (subscription)
Large Wall Street banks would have more trading freedom under the Volcker rule as a result of changes U.S. regulators are considering, according to people familiar with the matter.

Company News

European Companies Hit by FX Headwinds in Q1 – MarketWatch
European companies are reporting slower earnings growth as currency headwinds and higher input costs squeeze profits. Their profit outlook is shadowed by the specter of potential tariffs, despite a robust economic forecast for the region.

Middleton Joins Mesirow – Profit & Loss
Mesirow Financial has announced the hire of Amy Middleton as senior vice president within its currency management business.

Biggs Joins CFH Clearing – Profit & Loss
CFH Clearing has appointed Andy Biggs as head of liquidity, a newly created role aimed at bringing a stronger analytical focus to its liquidity offering.

Crypto News

Bitcoin May Be Down, But a Digital Currency Startup Still Soars – Wall Street Journal (subscription)
A digital-currency startup backed by Goldman Sachs Group Inc. is now worth about $3 billion after a new fundraising round.

CME Launches Ether Reference Rate, Real Time Index – Profit & Loss
CME Group has launched a reference rate for ether, the native cryptocurrency of the Etherium network.

Bitcoin Exchange Coinbase Targets High-Speed Traders with New Services – Financial Times (subscription)
Coinbase, the US bitcoin exchange, is to revamp its trading systems and add more sophisticated services in a bid to woo big institutional investors such as hedge funds and high-frequency traders to the digital currencies marketplace.

Market Savvy

Pimco Sees U.S. 10-Year Treasury Yields Topping Out at 3.5% – Bloomberg
U.S. 10-year Treasury yields will move in a 3 percent to 3.5 percent range for the rest of the year as the Federal Reserve continues raising interest rates, said Robert Mead, co-head of Asia-Pacific at Pacific Investment Management Co.

Argentina Peso Closes Higher but Inflation Soars to 25.5 Percent – Reuters
Argentina’s peso snapped its losing streak on Tuesday, closing 3.73 percent stronger at 24.10 per U.S. dollar after the central bank sold reserves but before the government reported 12-month inflation at a dizzying 25.5 percent.

Emerging Markets Face Their Moment of Truth – Bloomberg
Ask most any smart investor what could cause the next crisis in markets and the likely answer would be a sharp rise in borrowing costs brought on by a selloff in the bond market. But the thing about markets is that the pain usually originates in places where it’s least expected. That may be the case now with emerging markets.