Asia Eyes Steady Open, Bonds Up Amid Taper Debate: Markets Wrap

(Bloomberg) -- Asian stocks are poised for a steady open Thursday, following gains for U.S. shares and Treasuries as the Federal Reserve minutes showed policy makers still awaiting more evidence of economic strength to determine a timeline for tapering asset purchases.

Futures pointed slightly lower in Japan and higher in Australia, and were little changed in Hong Kong. U.S. contracts were stable after the S&P 500 and Nasdaq Composite both closed at all-time highs. Ten-year U.S. Treasury yields fell for a seventh trading day, dipping briefly below 1.3% for the first time since February, as expectations for an inflationary rebound continued to fade.

The Fed minutes indicated officials weren’t ready to communicate a schedule for scaling back their bond-buying program, due to high uncertainty over the course of the recovery. They did, however, want to establish a plan in case a move is needed sooner.

The dollar held gains against a basket of major currencies. Oil pared losses as investors await further signals from the OPEC+ alliance on production plans after a breakdown in talks.

Central bank plans for their emergency-mode policy settings globally remain critical to the market outlook, especially the fate of the Fed’s $120 billion in monthly bond purchases. In Europe, policy makers agreed to raise their inflation goal to 2% and allow room for an overshoot when needed, according to officials familiar with the matter -- which could give more scope for sustaining ultra-loose policy for longer. Meanwhile, China flagged the possibility of a reserve requirement ratio cut to help the economy.

“I think the Goldilocks scenario will last for quite a while,” Belita Ong, chair of Dalton Investments, said on Bloomberg Television. “We are at a point where the central banks all over the world have very much a desire to keep interest rates low and fortunately we have not seen any long-term significant signs of inflation.”

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Here are some events to watch this week:

• The Group of 20 finance ministers and central bankers meet in Venice on Friday
• China PPI and CPI data released on Friday

These are some of the main moves in markets:

Stocks

• S&P 500 futures were steady as of 8:23 a.m. in Tokyo. The S&P 500 rose 0.3%
• Nasdaq 100 futures inched up. The Nasdaq 100 rose 0.2%
• Nikkei 225 futures were down 0.3%
• Australia’s S&P/ASX 200 Index futures rose 0.2%
• Hang Seng Index futures were little changed

Currencies

• The Japanese yen was at 110.61 per dollar
• The offshore yuan was at 6.4743 per dollar
• The Bloomberg Dollar Spot Index was little changed
• The euro traded at $1.1796

Bonds

• The yield on 10-year Treasuries declined three basis points to 1.32%
• Australia’s 10-year bond yield fell three basis points to 1.36%

Commodities

• West Texas Intermediate crude was at $72.25 a barrel
• Gold was at $1,803.07 an ounce

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