(June 10): Asian stocks look set for a steady start Thursday after Treasuries rallied and U.S. equities edged lower ahead of an American inflation report that may provide clues on the direction of monetary policy.
Futures were little changed in Japan, Australia and Hong Kong. The S&P 500 again flirted with a record before slipping, continuing a pattern of range-bound trading also evident at a global level. U.S. equity contracts inched up.
The 10-year Treasury yield fell below 1.5% for the first time in a month, helped by a strong auction. The U.S. long bond rate dropped to a level unseen since March. That signals support for the view that the rebound from the pandemic will stoke only a transient bout of elevated inflation. The dollar was steady.
U.S.-China tensions are in focus, with Joe Biden revoking Trump-era bans on TikTok and WeChat. The president ordered a review of software applications from foreign adversaries and action against those that pose a security risk.
Broad market gauges are showing little concern about the upcoming U.S. inflation print or the possibility the Federal Reserve will begin discussions in the weeks ahead about tapering asset purchases. The meme-stock frenzy and gyrations in cryptocurrencies are some of the few sources of volatility.
“Even if inflation comes out a little higher than Street expectations tomorrow, the Fed isn’t going to change its path,” Esty Dwek, head of global market strategy at Natixis Investment Managers, said in a Bloomberg TV interview. “There’s a lot of wait-and-see going on and really just thinking it would take a lot to really surprise markets.”
The rally in commodities, one of the leading reflation plays, continued to stall. Oil slipped amid an increase in U.S. fuel stockpiles. Bitcoin held an advance.
Traders are awaiting the European Central Bank policy decision and a Group of Seven summit, which is set to vow delivery of at least 1 billion extra vaccine doses over the next year to help cover 80% of the world’s adult population.
Here are key events to watch this week:
U.S. consumer price index on Thursday.
European Central Bank decision on Thursday and press conference with President Christine Lagarde.
Iran nuclear deal talks reconvene in Vienna Thursday.
Group of Seven leaders’ summit starts in Cornwall, England Friday.
These are some of the main moves in markets:
Stocks
S&P 500 futures added 0.1% as of 8:04 a.m. in Tokyo. The index fell 0.2%
Nasdaq 100 futures were little changed, as was the index
Nikkei 225 futures were steady
Australia’s S&P/ASX 200 Index futures were little changed
Hong Kong’s Hang Seng Index futures fell 0.1%
Currencies
The Bloomberg Dollar Spot Index was stable
The euro was at US$1.2179
The Japanese yen traded at 109.63 per dollar
The offshore yuan was at 6.3885 per dollar
Bonds
The yield on 10-year Treasuries declined four basis points to 1.49%
Australia’s 10-year bond yield slipped seven basis points to 1.51%
Commodities
West Texas Intermediate crude fell 0.4% to US$69.71 a barrel
Gold was at US$1,888.92 an ounce
