Asian equities to be high ahead of US inflation: Market Roundup

(Bloomberg) - Asian stocks were mostly higher ahead of key inflation data, after U.S. stocks rallied and bonds climbed, which will help shape the outlook for the Fed's next move.

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Futures in Hong Kong and Australia showed gains, while futures in Japan showed modest losses, with trading in the region likely to be affected by holidays in countries such as Singapore. The S&P 500 fell by 0.8% before finishing higher by 0.1%. Treasury yields rose, with 10-year yields retreating from their highest levels of the year.

In the absence of relevant economic data, US traders focused on Wednesday's consumer price index. Market bets on a Fed rate cut were tempered as economic data remained strong, with officials arguing against the need for easing.

"Investors are increasingly questioning the June pivot, given the tween nature of the economy," said Marta Norton, Americas Premier Investment Officer at Morningstar Wealth." A deferral is the likely outcome, especially if we see an unexpected upside to March's inflation numbers.

The S&P 500 struggled for most of the Rock before rising back above the 5,200 mark Tesla Inc.Intel Corp. released a new version of its artificial intelligence chip Nvidia Corp.U.S. 10-year Treasury yields fell 6 basis points to 4.36% on Wednesday, while Australia's bond yields fell 6 basis points. Oil maintained its two-day decline and gold traded near a new record.

In Asia, the central banks of New Zealand and Thailand are expected to leave rates unchanged at their meetings on Wednesday.

"Andrew Brenner of NatAlliance Securities said, "CPI is the key data this week." The concern is that CPI continues to be a thorn in the Fed's side. But positioning is strongly bearish, and to quote some of the old traders we've worked with in the past, 'what hurts traders most happens when they are strongly positioned'."

Evercore's resonance Krishna Guha (Krishna Guha) believes that the U.S. inflation data in March and April will play an important role in determining whether the Fed will continue to cut interest rates in June.

"We do not believe that the hurdle is too serious, and the data will likely be good enough to warrant a further rate cut," Guha said.

The swap market's pricing of a Fed rate cut of about 65 basis points by the end of this year was lower than the central bank's forecast last month.

Federal Reserve Bank of Atlanta President Raphael Bostic reiterated his expectation of one rate cut this year, but added that he would be willing to change his view and push back a rate cut or additional cuts if the economic situation changed.

In Mohamed El-Erian's view, the Fed's long-term inflation expectations should be revised upward as macro conditions such as supply chains and production rates develop.

"Inflation is going to be sticky," the dean of Cambridge University's Queen's College and Bloomberg View columnist told Bloomberg Television." But that shouldn't stop the Fed, as the 2% inflation target is too tight for a global economy that is undergoing a major adjustment."

While bond yields are likely to remain volatile in the near term as the market's view of the Federal Reserve's direction of travel changes, UBS's Maturity Officer continues to see an attractive outlook for the risk profile of high-quality bonds, including government and investment-grade corporate bonds.

"We continue to be bullish on high-quality bonds in our global portfolio," said Solita Marcelli of UBS Global Wealth Management, "and recommend investors lock in the attractive bond yields currently available ." We have a preference for maturities in the 1-10 year range and see value in sustainable bonds."

Important events this week

• On Wednesday, Japan's PPI

• On Wednesday, the Canadian interest rate resolution

• Wednesday, U.S. CPI, Fed Meeting Minutes

• On Wednesday, Chicago Fed Chairman Simmons Goolsbee spoke.

• On Thursday, China's PPI, CPI

• On Thursday, the eurozone ECB interest rate resolution

• Thursday: US Initial Jobless Claims, PPI

• On Thursday, New York Fed matron John Williams spoke.

• On Thursday, Boston Fed matron Susan Collins spoke.

• On Friday, China Trade

• On Friday, the University of Michigan Consumer Confidence Index

• On Friday, Citigroup, JPMorgan Chase and Wells Fargo will announce industry results.

• On Friday, San Francisco Fed matron Mary Daly spoke.

Main Market Movements

stock (market)

• As of 8:30 a.m. Tokyo time, the Hang Seng Index futures rose 0.5 percent.

• S&P/ASX 200 futures rose 0.3 percent.

• Nikkei 225 Index futures fell 0.3 percent.

• S&P 500 futures little changed. S&P 500 up 0.1%

Currency

• Bloomberg Dollar Spot Index little changed

• AUD little changed at USD0.6628

Encryption Currency

• Bitcoin little changed at $69,162.98

• Ether down 0.3% at $3502.65

debentures

• The yield on the 10-year Treasury note fell 6 basis points to 4.36 percent.

• Australia's 10-year bond yield fell 6 basis points to 4.11 percent.

bulk commodities

• West Texas Kerosene Intermediate crude up 0.1% to $85.34 per barrel

• Not much change in spot gold

This story was produced with the help of Bloomberg Automation.

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