(Bloomberg) — Australian and New Zealand bonds fell, echoing selling in Treasuries on Friday, ahead of US inflation data this week that will help identify the path ahead for the Federal Reserve.
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The two nations’ 10-year yields climbed three basis points in early trading Monday after their US equivalent edged higher Friday. Australian stocks fell, while major currencies were broadly stable after an index of the dollar weakened Friday.
Monday is marked by broad closures across Asia, with markets closed in Japan, China, Hong Kong, Singapore, Taiwan, South Korea, Malaysia and Vietnam for Lunar New Year holidays. US stocks ended Friday with a rally that pushed the S&P 500 to close above 5,000 index points for the first time.
The yen was little changed Monday at above 149 per dollar after touching a two-month low on Friday. The weakness followed comments from central bankers that the Bank of Japan would take its time raising interest rates. The yen is the worst performer among Group of 10 currencies this year.
US inflation data due Tuesday will be crucial for the Fed. Headline year-over-year inflation is expected to come in at 2.9%, according to consensus estimates — that would be the first reading below 3% since March 2021. Core inflation is set to ease fractionally lower to 3.7% on an annual basis, according to average forecasts from economists polled by Bloomberg.
“High inflation rarely has been tamed without precipitating a recession,” Ed Yardeni, president of Yardeni Research Inc., said in a Monday note. “The Fed has steered inflation down toward its 2% target while allowing the US economy to fly, avoiding a hard landing.”
The S&P 500 rose 0.6% on Friday to cap a fresh record, while the Nasdaq 100 rose 1%. The gains were helped along by technology stocks and positive signals from fourth-quarter earnings reports. Four in five of the companies that have reported in earnings season so far have exceeded expectations, brightening the outlook for corporate profits among analysts.
The advance for US stocks came even as traders push out expectations for Federal Reserve policy easing after commentary from central bankers that has skewed hawkish, and economic data showing no immediate need to trim interest rates.
Swaps market pricing shows investors anticipate the chance of a Fed cut in March at 15%, down from 65% a month ago. Traders also foresee four rate cuts in 2024, down from seven forecast at the end of last year.
In commodities, oil prices rose Friday, capping five days of consecutive increases for the price of West Texas Intermediate, the US benchmark. Those gains may be pared after comments from Iran’s foreign minister over the weekend who said the war in Gaza could be nearer to a “diplomatic solution”.
In Asia, data set for release includes inflation and industrial output reports for India.
Key events this week:
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India CPI, Monday
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Minneapolis Fed President Neel Kashkari, Fed Governor Michelle Bowman, Fed President Tom Barkin speak, Monday
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ECB executive board member Piero Cipollone, chief economist Philip Lane speak, Monday
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US CPI, Tuesday
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UK unemployment, Tuesday
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Japan producer prices, Tuesday
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UK inflation, Wednesday
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Argentina inflation, Wednesday
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Eurozone GDP, industrial production, Wednesday
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Russia CPI, Wednesday
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Indonesia presidential election, Wednesday
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Bank of England Governor Andrew Bailey speaks, Wednesday
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ECB governing council member Boris Vujcic and vice president Luis de Guindos speak
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Chicago Fed President Austan Goolsbee speaks, Wednesday
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Australia jobs, Thursday
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Japan GDP, Thursday
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Poland, Spain, Saudi Arabia CPI, Thursday
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UK GDP, Thursday
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US initial jobless claims, retail sales, Thursday
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Philippine central bank meeting on interest rates, Thursday
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ECB President Christine Lagarde speaks, Thursday
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Fed Governor Christopher Waller speaks, Thursday
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Bank of England policy makers Catherine Mann, Megan Green speak, Thursday
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France CPI, Friday
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Malaysia GDP, Friday
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South Korea jobless rate, Friday
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US housing starts, producer prices, Friday
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San Francisco Fed President Mary Daly, Fed Vice Chair for Supervision Michael Barr speak, Friday
Some of the main moves in markets:
Stocks
Currencies
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The euro was little changed at $1.0781
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The Japanese yen was little changed at 149.28 per dollar
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The offshore yuan was little changed at 7.2187 per dollar
Cryptocurrencies
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Bitcoin rose 0.4% to $48,141.48
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Ether fell 0.3% to $2,505.28
Bonds
Commodities
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West Texas Intermediate crude rose 0.8% to $76.84 a barrel
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Spot gold fell 0.5% to $2,024.26 an ounce
This story was produced with the assistance of Bloomberg Automation.
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