Shares in Asia declined as Treasury yields surged after the latest US inflation data bolstered bets on Federal Reserve rate hikes. Bonds in New Zealand and Australia joined the selloff in early trading Friday.
(Bloomberg) — Shares in Asia declined as Treasury yields surged after the latest US inflation data bolstered bets on Federal Reserve rate hikes. Bonds in New Zealand and Australia joined the selloff in early trading Friday.
Benchmark indexes fell in Japan and South Korea, while also slipping in Australia. Futures for Hong Kong stocks pointed to a lower open, while US contracts were little changed after the S&P 500 slid for the first time in five days, with banks underperforming ahead of earnings from JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. Friday.
Treasuries steadied in early trading hours in Asia after dropping across the curve in the previous session, with the yield on the 30-year rate surging as much as 19 basis points after a $20 billion auction of the securities drew weak demand.
The dollar also steadied after strengthening against all of its Group-of-10 peers Thursday following the increase in Treasury yields. The yen approached the 150 mark.
Meanwhile, Singapore’s Monetary Authority of Singapore kept its policy settings unchanged, in line with all economists’ forecasts. On the day ahead in Asia, Chinese inflation and trade data are on the calendar. China’s consumer price inflation probably stayed near zero in September, while producer prices likely continued to fall, according to Bloomberg Intelligence. Trade data for September will most likely show the slump in exports eased.
Swap contracts pushed the odds of another quarter-point Fed hike to about 40% — from closer to 30% Wednesday after the so-called core consumer price index, which excludes food and energy costs, increased 0.3% in the US last month. From a year ago, it rose 4.1%, the lowest since 2021. Economists favor the core gauge as a better indicator of underlying inflation than the overall CPI, which rose 0.4%, boosted by energy costs. Forecasters had called for a 0.3% monthly advance in both measures.
The Fed will want flexibility optionality around an additional rate hike, “just given the fact that inflation could stall out at a higher level,” Nadia Lovell, senior equity strategist at UBS Global Wealth Management, said on Bloomberg Television. “It’s a much easier to tilt hawkish in an environment where economic growth is strong and then dial that back if you need to than to be dovish just in case inflation surprises to the upside.”
Elsewhere, oil climbed in Asian trading after falling Thursday as US crude stockpiles increased, providing a buffer against heightened geopolitical risks in Israel and Gaza. Gold steadied.
Key events this week:
- China CPI, PPI, trade, Friday
- Eurozone industrial production, Friday
- US University of Michigan consumer sentiment, Friday
- Citigroup, JPMorgan, Wells Fargo, BlackRock results as the quarterly earnings season kicks off, Friday
- G20 finance ministers and central bankers meet as part of IMF gathering, Friday
- ECB President Christine Lagarde, IMF Managing Director Kristalina Georgieva speak on IMF panel, Friday
- Fed’s Patrick Harker speaks, Friday
Some of the main moves in markets:
- S&P 500 futures were little changed as of 9:22 a.m. Tokyo time. The S&P 500 fell 0.6%
- Nasdaq 100 futures rose 0.1%. The Nasdaq 100 fell 0.4%
- Japan’s Topix fell 0.7%
- Australia’s S&P/ASX 200 fell 0.5%
- Euro Stoxx 50 futures fell 0.2%
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0538
- The Japanese yen was little changed at 149.77 per dollar
- The offshore yuan was little changed at 7.3084 per dollar
- The Australian dollar was little changed at $0.6319
- Bitcoin rose 0.4% to $26,834.08
- Ether rose 0.5% to $1,543.43
- The yield on 10-year Treasuries declined one basis point to 4.68%
- Japan’s 10-year yield advanced 2.5 basis points to 0.775%
- Australia’s 10-year yield advanced nine basis points to 4.46%
- West Texas Intermediate crude rose 0.8% to $83.54 a barrel
- Spot gold rose 0.1% to $1,871.67 an ounce
This story was produced with the assistance of Bloomberg Automation.
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