- https://tmsnrt.rs/2zpUAr4
- Fed’s Waller cuts CPI as single number
- Beijing offers property support, COVID measures
- Biden will meet with Xi at the G20 meeting
SYDNEY, Nov 14 (Reuters) – Asian stock markets were mixed on Monday as a top U.S. central banker warned investors not to get carried away by more than one inflation figure, while Chinese stocks gained signs of help for the country’s hard-hit real estate sector.
A modest error in US inflation was enough to see two-year Treasury yields fall 33 basis points for the week and the dollar lose nearly 4%, the fourth-biggest weekly decline since the start of the was of free-floating exchange rates over 50 years ago.
However, the resulting easing of US financial conditions was not entirely welcomed by the Federal Reserve, with Governor Christopher Waller saying a series of soft reports would be needed for the bank to take the brakes off. Read more
Waller added that markets were getting way ahead of themselves on a single inflation impression, although he conceded that the Fed may now start thinking about hiking at a slower pace.
Futures are betting heavily on a half-point rate hike to 4.25-4.5% in December, then a couple of quarter-point moves to a high in the 4.75-5 range .0%
Two-year yields rose to 4.42%, after falling to 4.29% on Friday.
“The downward surprise in the CPI aligns with a broad range of indicators pointing to a downward shift in global inflation that should encourage a moderation in the pace of monetary policy tightening in the Fed and elsewhere,” said Bruce Kasman, head of economic research at JPMorgan.
“This positive message must be tempered by the recognition that the downward shift in inflation will be too small for central banks to declare mission accomplished, and further tightening is likely.”
MSCI’s broadest index of Asia-Pacific shares outside Japan ( .MIAPJ0000PUS ) rose 1.1 percent, after rising 7.7 percent last week.
Japan’s Nikkei (.N225) slipped 0.8%, while South Korea (.KS11) was flat. S&P 500 futures fell 0.3% and Nasdaq futures lost 0.5%.
EUROSTOXX 50 futures gained 0.4%, while FTSE futures rose 0.1%.
EYES ON CHINA
Dealers were also waiting to see whether Chinese shares could extend their big rally amid reports that regulators have asked financial institutions to extend more support to stressed property developers. Read more
China’s real estate index (.CSI000952) rose 5% in response. Blue chips (.CSI300) rose 1.1%, helped by a series of changes to China’s COVID restrictions, even as the country reported more cases over the weekend. Read more
“It’s hard to see how the news of the case is more than negative from an economic point of view, but it is symbolic of the movement, however small, in the zero-covid strategy that markets are happily embracing,” said Ray Attrill, head of currency strategy. at the NAB.
US President Joe Biden will meet in person with Chinese leader Xi Jinping on Monday for the first time since taking office, with US concerns over Taiwan, Russia’s war in Ukraine and the North Korea’s nuclear ambitions as top of its agenda. Read more
News of the COVID rules had fueled a brief rebound in the yuan, which added pressure on the dollar as yields fell. The yuan settled 1.4% firmer on Monday, the biggest move since 2005.
The dollar index rose a fraction on Monday to 106.920, but still well below last week’s 111.280.
The euro eased a touch to $1.0308, after rising 3.9% last week, while the dollar firmed at 139.49 yen after falling 5.4% in last week.
The dollar lost almost as much against the Swiss franc, guided in part by warnings from the Swiss National Bank that it would use rates and foreign exchange purchases to control inflation. Read more
Sterling eased to $1.1755 ahead of the British chancellor’s autumn statement on Thursday, where he is expected to set out tax rises and spending cuts. Read more
Cryptocurrencies remained under pressure as at least $1 billion of client funds were reported to have disappeared from collapsed crypto exchange FTX. Read more
Bitcoin was trading up 1.5% at $16,055, after losing nearly 22% last week.
The dollar’s recent retreat gave commodities a much-needed boost, with gold holding steady at $1,760 an ounce after jumping more than $100 last week.
Oil futures extended gains on hopes of a pick-up in Chinese demand, with Brent up 28 cents at $96.27, while U.S. crude rose 20 cents to 89.16 dollars a barrel
Reporting by Wayne Cole; Edited by Shri Navaratnam and Kenneth Maxwell
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