Wednesday, January 26

Stocks Hold Firm Ahead of US CPI Treasury Fall: Markets Close


Stocks in Asia were flat on Monday as investors watch how price pressures impact monetary policy and the pace of the economic recovery. Treasury yields increased.

Stocks fell in Japan and Hong Kong, while China rose. US futures tumbled after all major US equity benchmarks rose to records on Friday, and the S&P 500 posted its fifth consecutive weekly rally. That was after a broad-based, larger-than-forecast gain in US payrolls that also showed an increase in average hourly earnings.

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Australian bonds rallied after the 10-year US Treasury yield fell below 1.5% on Friday. Markets will closely follow a reading on US consumer prices this week. The dollar went up.

In China, the Communist Party meets for the first time in more than a year this week. The meeting is expected to lay the groundwork for extending the term of President Xi Jinping, who has rocked the markets with his “common prosperity” campaign to redistribute the nation’s wealth.

The inflation debate continues to cast a shadow over markets that had been comforted by a strong earnings season despite rising inflation and supply chain tangles. The president of the Federal Reserve Bank of Kansas City, Esther George, said that the risk of a prolonged period of high inflation has increased and the case for patience has diminished.

“Inflation is the main headwind right now,” Dana D’Auria, Envestnet’s co-chief investment officer, told Bloomberg Television. “There is a disconnect at this point between some of the expectations we have about inflation and what consumers are feeling on the ground.”

US consumer prices on Wednesday are expected to show price pressures at the fastest pace in three decades amid supply chain bottlenecks and increased energy, according to Bloomberg Intelligence.

The October and November CPI figures “are very important considerations about the path the Fed will take,” Mahjabeen Zaman, Citigroup senior investment specialist, told Bloomberg Radio. “We believe that there is an upside risk in both CPI numbers and as a result there is a risk that the Fed may accelerate the pace of asset purchases.”

Further on the economic front, China posted a record monthly trade surplus in October as exports surged, underscoring support for the Chinese economy that slowed sharply in recent months. In the United States, the House approved the largest US infrastructure package in decades on Friday.

Elsewhere, oil surged as traders weighed the odds of a crude release from the US Strategic Petroleum Reserve after OPEC + resisted a plea from President Joe Biden to increase supplies. more quickly. Bitcoin is trading around $ 65,000.

What to watch this week:

  • The Central Decision-Making Committee of the Communist Party of China begins meeting on Monday. Until November 11.
  • Federal Reserve Bank of San Francisco President Mary Daly speaks Tuesday.
  • China’s aggregate financing, money supply, new loans in yuan on Tuesday.
  • China PPI Wednesday.
  • US Wholesale Inventories, CPI, Initial Jobless Claims Wednesday.
  • The Marked US Bond is closed in observance of Veterans Day Thursday.
  • China celebrates its annual Singles Day, the world’s largest shopping festival, when e-commerce giants like Alibaba and JD.com Inc. lure shoppers with bargains on Thursday.

Some of the main movements in the markets:

Stocks

  • S&P 500 futures were down 0.2% as of 6am in London. The S&P 500 was up 0.4%
  • Nasdaq 100 futures fell 0.3%. The Nasdaq 100 rose 0.1%
  • The Topix Index lost 0.2%
  • Australia’s S & P / ASX 200 Index fell 0.1%
  • The Kospi index fell 0.1%
  • The Hang Seng Index fell 0.5%
  • The Shanghai Composite Index rose 0.2%
  • Euro Stoxx 50 futures changed little

Currencies

  • The Japanese yen was trading at 113.58 to the dollar, down 0.2%.
  • The offshore yuan was at 6.3949 to the dollar.
  • Bloomberg’s dollar spot index rose 0.1%
  • The euro was at $ 1.1563

Captivity

  • The 10-year Treasury yield rose about one basis point to 1.47%.
  • Australia’s 10-year bond yield fell six basis points to 1.75%.

Raw Materials

  • West Texas Intermediate crude rose 1.2% to $ 82.25 a barrel
  • Gold was at $ 1,820.98 an ounce

© 2021 Bloomberg


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