Global Markets: Long-dated Treasuries are expected to have their worst week in a year as Asian markets decline
Reuters' SYDNEY While longer-dated Treasury rates are on track for their largest weekly increase this year as prospects for significant U.S. rate reduction in 2025 wane, Asia markets dipped on Friday as a strong dollar kept risk sentiment fragile.Although a high-level Beijing meeting promised to raise debt and encourage consumption, it was unable to improve the Chinese equity markets. As Donald Trump's comeback draws near, policymakers are bracing for further trade disputes with the United States.
With rate differentials favoring the US currency, Switzerland, Canada, and the European Central Bank have all lowered their rates in the past week.
The increase in long-term Treasury yields has been the week's other major theme. Although markets believe the Fed will sound cautious about next year, they are still optimistic that it will cut next week. With only two further easings factored in at 3.8% by the end of 2025, futures suggest little possibility of a move in January.
This week, 30-year rates have increased by 22 basis points, the most since October 2023.
In comparison, rates in Canada are predicted to drop from 3.25% to 2.7% by that time, while rates in Europe are currently 1.75% compared to 3%.
Friday morning trading saw a 0.5% decline in MSCI's broadest index of Asia-Pacific stocks outside of Japan.Despite a 1% decline, Japan's Nikkei is still on pace to gain 0.9% weekly.
Following the Central Economic Work Conference's failure to provide information on additional stimulus measures, Hong Kong's Hang Seng fell 1.2% and China's blue chips fell 0.7%. A subindex of Hong Kong-listed Chinese real estate companies fell 2.6%.
Barclays top China economist Jian Chang said the CEWC probably let markets down since a Politburo speech on Dec. 9 had stoked expectations of more aggressive easing.
"We maintain our view that incremental and reactive policy is more likely than pre-emptive and 'bazooka' policy," he stated.
As some investors booked profits on the Nasdaq's unrelenting run to all-time highs, Wall Street stocks finished lower overnight. Nevertheless, Nasdaq futures increased by 0.4% in Asia.
Due to a 50% increase in egg prices, U.S. producer pricing data in November came out a little hotter than anticipated at 0.4%. Goldman Sachs reduced its prediction for the Fed's preferred inflation indicator, the core personal consumption expenditures price index, which is expected next week, to a monthly increase of 0.13% as a result of the worse core data.
The dollar is expected to rise 1% every week against its counterparts in the foreign currency market. [FRX/]
This week, 30-year rates have increased by 22 basis points, the most since October 2023.
In comparison, rates in Canada are predicted to drop from 3.25% to 2.7% by that time, while rates in Europe are currently 1.75% compared to 3%.
Friday morning trading saw a 0.5% decline in MSCI's broadest index of Asia-Pacific stocks outside of Japan.Despite a 1% decline, Japan's Nikkei is still on pace to gain 0.9% weekly.
Following the Central Economic Work Conference's failure to provide information on additional stimulus measures, Hong Kong's Hang Seng fell 1.2% and China's blue chips fell 0.7%. A subindex of Hong Kong-listed Chinese real estate companies fell 2.6%.
Barclays top China economist Jian Chang said the CEWC probably let markets down since a Politburo speech on Dec. 9 had stoked expectations of more aggressive easing.
"We maintain our view that incremental and reactive policy is more likely than pre-emptive and 'bazooka' policy," he stated.
As some investors booked profits on the Nasdaq's unrelenting run to all-time highs, Wall Street stocks finished lower overnight. Nevertheless, Nasdaq futures increased by 0.4% in Asia.
Due to a 50% increase in egg prices, U.S. producer pricing data in November came out a little hotter than anticipated at 0.4%. Goldman Sachs reduced its prediction for the Fed's preferred inflation indicator, the core personal consumption expenditures price index, which is expected next week, to a monthly increase of 0.13% as a result of the worse core data.
The dollar is expected to rise 1% every week against its counterparts in the foreign currency market. [FRX/]
0 Comments