Yields, Dollar Jump on Fed Views as Safe Haven Ebbs: Markets Roundup

(Bloomberg) — Stocks in Asia appear poised for a steadier session on Wednesday, as anxiety over U.S.-China tension eases somewhat, though a rise in bond yields and the dollar on Hardline Fed views may keep the mood cautious.

Futures pointed to moderate openings in Japan and Australia and the possibility of Hong Kong correcting some of the losses triggered by concerns about US House Speaker Nancy Pelosi’s visit to Taiwan. The S&P 500 and Nasdaq 100 contracts fluctuated after a drop in Wall Street stocks on Tuesday.

Treasuries fell, pushing the two-year yield above 3%. A chorus of Fed officials said the central bank has a ways to go to rein in high inflation, leading traders to cut bets on policy easing next year.

Rising yields helped lift the dollar gauge to the highest in about three weeks. Declining haven demand due to geopolitical risk has pushed the yen lower.

Comments from Fed officials including Mary Daly, Loretta Mester and Charles Evans served to highlight the challenging backdrop of rising borrowing costs, price pressures and slowing economic growth facing investors. markets.

San Francisco Fed President Daly said the Fed has “a long way to go” to achieve price stability around a 2% inflation target. Cleveland counterpart Mester said she wants to see “very compelling evidence” that monthly price increases are moderating.

“It’s hard to see a significant upside in stocks right now,” Xi Qiao, managing director of global wealth management at UBS Group AG, said on Bloomberg Television. “The market is going to be trading pretty mixed, it’s going to stay choppy until we have a little more certainty.”

missile tests

China, which regards Taiwan as part of its territory, announced missile tests and military exercises on the island after Pelosi became the highest-ranking US politician to visit in 25 years.

While market fears of a sharp deterioration in US-China ties appear to have cooled, the ill will highlights the risk of longer-term economic decoupling with a host of potential shocks, including tighter inflation. as supply chains adjust.

China’s Contemporary Amperex Technology Co. Ltd., the world’s largest maker of batteries for electric vehicles, decided to back down by announcing a multibillion-dollar North American plant to supply Tesla Inc. and Ford Motor Co. due to tensions generated by Pelosi’s trip to Taiwan. , according to people familiar with the matter.

Elsewhere, oil fell below $94 a barrel as traders counted down to an OPEC+ crude production meeting. Gold pulled back and Bitcoin hovered around $23,000.

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What to watch this week:

  • OPEC+ meeting on production, Wednesday
  • US Factory Orders, Durable Goods, ISM Services, Wednesday
  • BOE rate decision, Thursday
  • US Initial Jobless Claims, Trade, Thursday
  • Cleveland Fed President Loretta Mester will speak Thursday
  • US employment report for July, Friday

Some of the main movements in the markets:

Stocks

  • S&P 500 futures were up 0.1% at 7:19 a.m. in Tokyo. The S&P 500 fell 0.7%
  • Nasdaq 100 futures were little changed. The Nasdaq 100 fell 0.3%
  • Nikkei 225 futures rose 0.3%
  • S&P/ASX 200 futures down 0.2%
  • Hang Seng futures added 1.1%

coins

  • The Bloomberg Dollar Spot Index was little changed
  • The euro was at $1.0170
  • The Japanese yen was trading at 132.90 per dollar, 0.2% higher
  • The offshore yuan was trading at 6.7761 per dollar

Captivity

  • The 10-year Treasury bond yield advanced 18 basis points to 2.75%

raw Materials

  • West Texas Intermediate crude was trading at $93.69 a barrel, down 0.8%
  • Gold was trading at $1,760.32 an ounce.

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