Bonds tumble, stocks mixed on strong U.S. data: Market Roundup

(Bloomberg) - Asian markets opened mixed after U.S. stocks weakened and Treasuries sold off heavily as solid U.S. factory data reinforced speculation the Federal Reserve won't rush to cut interest rates.

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Australian stocks rose slightly after the Easter holiday, while Japanese futures rose on Tuesday, supported by a weaker yen. Hong Kong stocks also returned after the market closed. The S&P 500 fell 0.2% on Monday, while the Nasdaq Resonance Index rose 0.2%.

Australian and New Zealand bond yields rose, echoing the trend in Treasuries. U.S. bonds fell across the board on Monday, with yields on 10-year bonds climbing more than 10 basis points, as the manufacturing sector expanded unexpectedly for the first time since September 2022 and input costs climbed.

The Fed's easing priced into swaps this year slipped to about 65 basis points after the report was released, below policymakers' forecasts. Stocks also lost traction after the Standard & Poor's 500 Index rose for a fifth straight month.

"Investors are indeed anticipating ahead of time that the Fed may take a hawkish stance again," says Jose Torres of Interactive Brokers." The Fed's first rate cut could come in the second half of this year - the likelihood of a rate cut this June is edging closer to the probability of a coin translation."

Later this week, a report is expected to show that employment continued to rise in March while wage growth slowed. Fed chief Jerome Powell, who will speak Wednesday, said Friday that officials are waiting for more evidence that prices are under control.

The yen stabilized in Tuesday morning rock trading after falling to 152 yen per dollar on Monday. This decline increases the risk that Japanese officials may intervene in the market.

Ian Lyngen and Vail Hartman of BMO Capital Markets at BMO Capital Markets say that while the market seems "content" to use the release of manufacturing data as a trigger for the move in Treasurys, the headlines were made before the The bond sell-off had already begun before the news was announced.

"They pointed out: "Weekly price action in the futures market suggests that the pendulum of U.S. interest rate sentiment may be moving on the side of the曏 Hawk - as much as possible, it is self-evident that there is still a lot of room for a meaningful change in expectations with the disclosure of more data.

The GSA's Manufacturing Index rose to 50.3 last month, barely above the 50 level that separates expansion from contraction, but it ended a 16-month streak of activity contraction. Meanwhile, the Institute's index of prices paid rose to 55.8, the highest since July 2022, while the Institute's index of prices paid for goods and services rose to 50.3, the highest since July 2022.

Michael Shaoul of Marketfield Asset Management believes that "what is most troubling" may be the surge in prices paid." This suggests that some of the 'transitional' relief from reflationary forces is beginning to reverse."

In Asia, data to be released on Tuesday include Korean inflation data, India's Purchasing Managers' Index and the minutes of the Reserve Bank of Australia meeting. Reserve Bank of Australia (RBA) Assistant Governor Resistor Christopher Kent said on Tuesday that the RBA will move to a new system of monetary policy execution as passive quantitative tightening has led to a decline in the banking system's reserves.

Investors will also be keeping a close eye on China's stock market, where the CSI 300 index rose the most in a month on Monday on hopes that the world's second-largest economy will be revitalized.

U.S. Stocks

S&P 500 calls expiring in one year have a 25% chance of making money (called a 25-delta), and their cost is rising while the cost of an equivalent put is falling. This means that investors are prepared for a sustained uptrend in Big Pan and are not particularly worried about a small correction.

After an incredibly strong run-up, stocks are likely to trade more volatile, with little fear in prices, according to Wolfe Research's resonant Chris Senyek.

"Periods of overvaluation typically last nearly a year at Goldman Sachs Group Inc. led by Ryan Hammond, and are usually benign if the ensuing economic growth environment is healthy. "

Main events of the week

The S&P Global Manufacturing Purchasing Managers' Index for the Eurozone, Tuesday
U.S. Factory Orders, Light Vehicle Sales, JOLTS Job Openings, Tuesday
On Tuesday, Federal Reserve Supervisors John Williams, Loretta Mester, Mary Daly and Michelle Bowman spoke
St. Louis Fed chief mat Alberto Musalem took office on Tuesday. He replaces James Bullard.
On Wednesday, China's Caixin Purchasing Managers' Index for Service Sector
Wednesday, Eurozone CPI, Unemployment Rate
On Wednesday, the Purchasing Managers' Index for Japan's service sector
Wednesday, U.S. ADP Employment, ISM Service Sector
On Wednesday, Federal Reserve Chairman Simmons Bauer spoke.
Fed chiefs Austan Goolsbee, Adriana Kugler and Michelle Bowman will also speak on Wednesday.
Thursday: Eurozone S&P Global Services Purchasing Managers' Index, PPI
Thursday: U.S. Initial Jobless Claims, Challenger Layoffs
On Thursday, Fed's Loretta Mester, Alberto Musalem, Thomas Barkin, Patrick Harker, and Austan Goolsbee are scheduled to speak
On Thursday, the European Central Bank announced its March interest rate decision.
On Friday, Eurozone retail sales
On Friday, the U.S. unemployment rate, the number of non-employed persons
On Friday, the Fed's Michelle Bowman, Thomas Barkin and Lori Logan spoke

Some of the major movements in the market:

stock (market)

As of 8:26 a.m. Tokyo time, S&P 500 futures were little changed.
Nasdaq Resonance 100 Index futures little changed
Nikkei 225 futures rose 0.2%.
Australia's S&P/ASX 200 index rose 0.2 percent.

Currency

Bloomberg Dollar Spot Index little changed
Euro exchange rate little changed at US$1.0737
The yen was flat at 151.65 yen per US dollar.
The offshore RMB exchange rate was little changed at US$7.2606 per US dollar.

Encryption Currency

Bitcoin little changed at $69,836.59
Ether up 0.4% at $3,510.64

debentures

Australia's 10-year bond yield rose 8 basis points to 4.06 percent.

bulk commodities

West Texas Kerosene Intermediate crude up 0.2% to $83.91 per barrel
Not much change in spot gold

This story was produced with the help of Bloomberg Automation.

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