Aussie Bonds Fall Before US CPI Amid Asia Holidays: Markets Wrap

(Bloomberg) — Australian bonds and stocks fell before US inflation data due Tuesday. A swath of markets across Asia are shut for Lunar New Year holidays.

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Aussie and New Zealand bonds opened lower after Treasuries slipped for a third day Friday when investors wound back bets on Federal Reserve interest-rate cuts this year. Trading of cash Treasuries is closed in Asia due to a holiday in Japan.

Asian markets shut Monday also include China, Hong Kong, Singapore, Taiwan, South Korea, Malaysia and Vietnam.

The yen edge higher against the dollar after sliding a two-month low Friday following comments from central bankers that the Bank of Japan will take its time raising interest rates. Japan’s currency has weakened against all its Group-of-10 peers this year.

US equity futures were little changed after shares ended Friday with a rally that pushed the S&P 500 to a close above 5,000 index points for the first time. European stock futures crept higher.

Bitcoin climbed toward last month’s high of just above $49,000, which was set when a number of US spot exchange-traded funds began trading.

US inflation data due Tuesday will help identify the path ahead for the Fed. The annual inflation rate is forecast to have slowed to 2.9% in January from 3.4% the prior month, according to consensus estimates of economists. That would be the first reading below 3% since March 2021.

“High inflation rarely has been tamed without precipitating a recession,” Ed Yardeni, president of Yardeni Research Inc., wrote in a research 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 set a fresh record, while the Nasdaq 100 jumped 1%. The gains were helped by technology stocks and positive fourth-quarter earnings. Four in five of the companies that have reported their results so far have exceeded expectations, brightening the outlook for corporate profits.

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The advance for US stocks came even as traders pushed back expectations for Fed policy easing after relatively hawkish commentary from central bankers 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 now foresee four 25-basis-point rate cuts in 2024, down from seven forecast at the end of last year.

In commodities, oil prices fell for the first time in six days after Iran’s foreign minister said the war in Gaza may be nearer to a “diplomatic solution.”

In Asia, data set for release Monday include inflation and industrial output reports for India.

Key events this week:

• India CPI, Monday

• Minneapolis Fed President Neel Kashkari, Fed Governor Michelle Bowman, Fed President Tom Barkin speak, Monday

• ECB executive board member Piero Cipollone, chief economist Philip Lane speak, Monday

• US CPI, Tuesday

• UK unemployment, Tuesday

• Japan producer prices, Tuesday

• UK inflation, Wednesday

• Eurozone GDP, industrial production, Wednesday

• Indonesia presidential election, Wednesday

• Bank of England Governor Andrew Bailey speaks, Wednesday

• ECB governing council member Boris Vujcic and vice president Luis de Guindos speak

• Chicago Fed President Austan Goolsbee speaks, Wednesday

• Australia jobs, Thursday

• Japan GDP, Thursday

• UK GDP, Thursday

• US initial jobless claims, retail sales, Thursday

• Philippine central bank meeting on interest rates, Thursday

• ECB President Christine Lagarde speaks, Thursday

• Fed Governor Christopher Waller speaks, Thursday

• Bank of England policy makers Catherine Mann, Megan Green speak, Thursday

• US housing starts, producer prices, Friday

• San Francisco Fed President Mary Daly, Fed Vice Chair for Supervision Michael Barr speak, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 12:02 p.m. Tokyo time

• Nasdaq 100 futures were little changed

• Australia’s S&P/ASX 200 fell 0.2%

• Euro Stoxx 50 futures rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro rose 0.1% to $1.0795

• The Japanese yen was little changed at 149.19 per dollar

• The offshore yuan was little changed at 7.2225 per dollar

Cryptocurrencies

• Bitcoin was little changed at $48,151.19

• Ether was little changed at $2,503.52

Bonds

Commodities

This story was produced with the assistance of Bloomberg Automation.

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