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The global markets rallied collectively on Wednesday, boosted by news of behind-the-scenes talks between the US and Iran. Crude oil prices plunged over 5%, while government bonds and major stock indices climbed in tandem. Against this backdrop, mortgage-backed securities spreads were particularly remarkable, with the 5.5% coupon type rebounding above par value.Optimism about easing geopolitical tensions was the main driving factor in the market. According to reports, Pakistan handed over a US proposal to Iran, and both Turkey and Pakistan were listed as possible negotiation venues. However, analysts cautioned that Iran remains steadfast regarding its nuclear stance, suggesting the negotiations could drag on for a long time. Additionally, repairing energy infrastructure will require substantial time, and the unresolved shipping congestion in the Strait of Hormuz further increases economic uncertainty.On the latest economic data, both US import and export prices rose 0.5% month-on-month in February, in line with expectations. Data from the Mortgage Bankers Association showed that for the week ending March 20, the mortgage applications index plunged 10.5%, with the refinancing index dropping sharply by 14.6% and the purchase index falling by 5.4%. This highlights that high interest rates continue to suppress the real estate market.European Central Bank President Lagarde warned that energy shocks triggered by geopolitical conflict could lead to interest rate hikes. UK CPI for February remained steady year-on-year at 3.0%, while core CPI inched up to 3.2%. In the remainder of the week, the market will focus on the US Q4 current account, crude oil inventory data, and the Treasury Department's auctions of two-year floating rate notes and five-year government bonds.Federal Reserve Governor Bowman will speak at the Digital Assets Summit and participate in a discussion on Wednesday evening. The market has already partly priced in expectations for eased geopolitical risks, but the potential back-and-forth in the negotiation process and the actual recovery of energy supplies still need time to be verified. Asset price volatility may intensify in the short term.

According to ChainCatcher, as reported by The Block, payment giant VISA and Dune have jointly released a report indicating that non-USD stablecoins are gradually being used as actual “local currencies,” with significantly increasing applications in payment and settlement scenarios. Unlike USD stablecoins, which are mainly used for DeFi yield strategies, non-USD stablecoins are more often utilized in real fund transfer scenarios such as cross-border payments, remittances, B2B settlements, and foreign exchange management. These assets are primarily distributed among user wallets, centralized exchanges, and institutional treasuries. Data shows that as of this February, the total supply of non-USD stablecoins reached 1.1 billion USD, about three times higher than in January 2023. During the same period, transfer volume soared from 600 million USD to 10 billion USD, an increase of over 1,600%. Currently, more than 1.2 million addresses hold related stablecoins, and the number of active sending addresses has also grown from approximately 6,000 to 135,000.

Barclays' month-end foreign exchange flow model indicates that the US dollar will see strong buying against all major currencies, with month-end and quarter-end factors especially favoring the Canadian dollar, Australian dollar, and Scandinavian currencies. Fund managers adjusting their portfolios typically sell US dollars when US assets perform well to bring their asset allocation back to target levels; conversely, they buy US dollars when US assets underperform (provided they maintain hedging).