Asia Stocks Set for Steady Start; Bond Yields Jump: Markets Wrap
(Bloomberg) -- Asian stocks looked set for a steady start Wednesday after a mixed Wall Street session and a further climb in Treasury yields as traders weighed the prospect of tighter monetary policy to curb inflation.
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Australian shares fell, while futures for Japan and Hong Kong were little changed. U.S. contracts wavered after energy and financials helped the S&P 500 eke out a gain, while the Nasdaq 100 extended a drop. A gauge of Chinese equities traded in the U.S. fell for a second day.
Treasuries declined, the yield curve steepened and the dollar ticked higher. Bond market inflation expectations have retreated from mid-November highs on bets the Federal Reserve will speed up the withdrawal of monetary stimulus.
Oil held a climb in response to a smaller-than-expected move from consumer nations to tap strategic reserves and the possibility of OPEC+ reconsidering plans to add supply. Gold is being pressured by higher yields.
Curbing inflation is now center-stage for policy makers, building up a test for markets as ultra-loose, pandemic-era monetary stimulus is scaled back. A deluge of U.S. data and the latest Fed minutes, all due Wednesday, will give investors the latest 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, New Zealand’s currency was around a six-week low. The nation’s central bank is expected to raise interest rates for a second straight month and signal a more aggressive tightening cycle to contain inflation. In emerging markets, the Turkish lira’s freefall shattered records as President Recep Tayyip Erdogan defended his pursuit of lower interest rates.
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:
Reserve Bank of New Zealand rate decision Wednesday
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 fell 0.1% as of 8:41 a.m. in Tokyo. The S&P 500 rose 0.2%
Nasdaq 100 futures fell 0.1%. The Nasdaq 100 fell 0.5%
Nikkei 225 futures were flat
Australia’s S&P/ASX 200 Index fell 0.1%
Hang Seng Index futures were little changed
Currencies
The Japanese yen was at 115.17 per dollar
The offshore yuan was at 6.3906 per dollar
The Bloomberg Dollar Spot Index rose 0.1%
The euro rose was at $1.1244
Bonds
The yield on 10-year Treasuries advanced four basis points to 1.67%
Australia’s 10-year bond yield rose five basis points to 1.92%
Commodities
West Texas Intermediate crude was at $78.39 a barrel, down 0.1%
Gold was at $1,789.72 an ounce
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