Stocks, Treasuries Steady Before Data, Fed Minutes: Markets Wrap

Stocks, Treasuries Steady Before Data, Fed Minutes: Markets Wrap
Andreea Papuc
·3 min read

(Bloomberg) -- Asian stocks were steady Wednesday and Treasury yields held a climb as traders weighed the risk of tighter monetary policy to curb inflation and awaited U.S. data as well as Federal Reserve minutes.

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Shares fell in Japan and fluctuated in China and Hong Kong. U.S. futures were little changed after energy and financials helped the S&P 500 eke out a gain, while the Nasdaq 100 extended a drop. A slew of reports are due later in the day on U.S. economic activity and inflation pressures.

The 10-year U.S. Treasury yield was around 1.65%. The prospect of the Fed speeding up the withdrawal of monetary stimulus has tempered bond market inflation expectations, though they remain elevated.

New Zealand’s currency weakened after the nation raised interest rates to 0.75% to curb price pressures, a smaller move than some had expected. The central bank projected 2% benchmark borrowing costs by the end of 2022.

Damping inflation is now center-stage for policy makers, posing a test for markets as ultra-loose, pandemic-era monetary stimulus is scaled back. The deluge of U.S. data and the Fed minutes will give investors a read on price pressures and the economic recovery.

“For quite a while now that extra liquidity hasn’t been going into the economy, it has been going more into the markets,” Matt Maley, chief market strategist for Miller Tabak + Co., said on Bloomberg Television. “The Fed is going to start pulling back on that.”

Elsewhere, oil pared a rally sparked by a smaller-than-expected move from consumer nations to tap strategic reserves. Gold is being pressured by higher yields.

Looking ahead to the Fed minutes, it’s key to watch for “discussions around the criteria for a quicker taper of asset purchases,” Carol Kong, a strategist at Commonwealth Bank of Australia, wrote in a note. Inflation trends suggest the Fed needs to start tightening sooner that presently signaled, Kong added.

For more market analysis, read our MLIV blog.

Here are some key events this week:

  • U.S. FOMC minutes, consumer income, wholesale inventories, new home sales, GDP, initial jobless claims, U.S. durable goods, University of Michigan consumer sentiment. All Wednesday

  • Bank of Korea policy decision Thursday

  • U.S. Thanksgiving Day: U.S. equity, bond markets closed Thursday

  • Bank of England Governor Andrew Bailey speaks with Mohamed El Erian at a Cambridge Union event. Thursday

Some of the main moves in markets:

Stocks

  • S&P 500 futures were little changed as of 10:47 a.m. in Tokyo. The S&P 500 rose 0.2%

  • Nasdaq 100 futures were little changed. The Nasdaq 100 fell 0.5%

  • Japan’s Topix index was down 0.5%

  • South Korea’s Kospi was flat

  • Australia’s S&P/ASX 200 Index rose 0.1%

  • Hong Kong’s Hang Seng Index fell 0.1%

  • China’s Shanghai Composite Index fell 0.1%

Currencies

  • The Japanese yen was at 115.12 per dollar

  • The offshore yuan was at 6.3913 per dollar

  • The Bloomberg Dollar Spot Index rose 0.1%

  • The euro was at $1.1241

Bonds

  • The yield on 10-year Treasuries was at 1.66%

  • Australia’s 10-year bond yield rose two basis points to 1.89%

Commodities

  • West Texas Intermediate crude was at $78.32 a barrel, down 0.2%

  • Gold was at $1,792.43 an ounce, down 0.2%

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