(Bloomberg) — Asian stocks tumble as better-than-expected U.S. inflation data confirms views that the U.S. Federal Reserve may keep long-term interest rates high. is preparing for an early decline.
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Stock futures in Japan, Australia and Hong Kong fell across the board, reflecting Wednesday’s selling on Wall Street. Benchmark futures were marginally lower in early Asian trade on Thursday, with the S&P 500 down 1% and the Nasdaq 100 down 0.9%.
The dollar rose on Wednesday as U.S. Treasury yields rose across the curve. The yield on the policy-sensitive two-year note rose 23 points, while the 10-year note rose 18 basis points, topping 4.5% for the first time since November. Australian and New Zealand 10-year bond yields both rose more than 10 basis points (bp) early Thursday.
The US move was driven by the March core consumer price index, which excludes food and energy costs. The index rose 0.4% from February, beating consensus estimates of 0.3% and beating expectations for the third consecutive month.
Investors now believe the Federal Reserve will cut interest rates only twice this year since September, fewer than the latest Fed dot plot that showed three cuts in 2024. Suggests. Market prices at the beginning of the year showed six cuts expected.
“We could kiss the Fed goodbye with a rate cut in June,” said Greg McBride of Bankrate. “There’s no improvement here. We’re going in the wrong direction.”
“Accommodative financial conditions continue to provide significant tailwinds for growth and inflation. As a result, the Fed is not done fighting inflation and interest rates will remain high for an extended period of time,” Apollo Global Management said. said Torsten Slok. “We stand by our view that the Fed will not cut rates in 2024,” he said.
Former Treasury Secretary Lawrence Summers went a step further, saying, “We need to take seriously the possibility that the next move in interest rates will be upward rather than downward.” Such a chance is in the 15% to 25% range, he told Bloomberg TV’s Wall Street Week with David Westin.
In Asia, datasets will be released including inflation expectations for Australia, consumer and producer prices for China, and trade statistics for the Philippines. Markets are closed in Indonesia, Malaysia, India, Pakistan, Sri Lanka and Bangladesh.
The yen gradually appreciated against the dollar after falling to its lowest level since 1990. The currency weakness has sparked fresh speculation that Japanese authorities may intervene in the market to support the currency.
Oil prices rose on fears of further conflict in the Middle East. US crude oil prices West Texas Intermediate on Wednesday said the US and its allies believe a major missile or drone attack by Iran or its proxies against military and government targets in Israel is imminent. After rising more than 1% on the news, the stock edged up.
This week’s main events:
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China PPI, CPI, Thursday
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Eurozone ECB interest rate decision Thursday
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U.S. new unemployment insurance claims, PPI, Thursday
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New York Fed President John Williams speaks Thursday
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Boston Fed President Susan Collins speaks Thursday
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china trade friday
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University of Michigan Consumer Sentiment, Friday
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Citigroup, JPMorgan and Wells Fargo are scheduled to report earnings on Friday.
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San Francisco Fed President Mary Daley speaks on Friday
The main movements in the market are:
stock
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S&P 500 futures were down 0.2% as of 8:21 a.m. Tokyo time.
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Nasdaq 100 futures fell 0.2%
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Nikkei 225 futures fell 1.1%
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Hang Seng futures fell 1.7%.
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S&P/ASX 200 futures down 0.8%
currency
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Bloomberg Dollar Spot Index little changed
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The euro was unchanged at $1.0743.
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The Japanese yen rose 0.2% to 152.93 yen to the dollar.
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The offshore yuan remained unchanged at 7.2624 yuan to the dollar.
cryptocurrency
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Bitcoin rose 1.2% to $70,656.87.
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Ether rose 0.8% to $3,542.67
bond
merchandise
This article was produced in partnership with Bloomberg Automation.
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