Asia markets feel the heat as Fed rate-hike bets gain steam
Growing Fed rate hike bets rocked Asian markets, with JGB yields rising, yen near 160, and bitcoin below $69,000.
European equities rose and the dollar strengthened in a calm session after US inflation data, with bond markets closed.
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After the nervous trading seen yesterday, today's session was far calmer with no significant post-CPI volatility.
Equity markets stayed calm, with Wall Street set for a strong bounce at the open. Tech stocks were prominent in pre-market, with Nasdaq futures up nearly 2% following an improved outlook from CoreWeave's earnings and a more stable tone from Nvidia.
European indices also extended the positive trend, with the DAX approaching fresh record highs and continuing its solid run since the end of last week.
However, trading conditions may be more difficult to interpret as the US bond market is closed today. Without Treasury yields to guide sentiment, a key gauge was missing, especially after the hotter-than-expected US inflation numbers yesterday.
In that context, signals were mixed as the dollar extended its rally. USD/JPY rose to its highest in over two months, breaking above 159.00 and sparking renewed talk of Japanese intervention. Meanwhile, EUR/USD slipped to 1.1130 after failing to hold above 1.1200 earlier in the week.
In commodities, gold edged up 0.3% to $4,044 but lacked conviction after the week's back-and-forth. Much will depend on the dollar and yields, with Fed expectations turning more hawkish after the inflation data and recent Fed commentary.
Oil prices also saw a minor bounce, with WTI crude rising to $87.33 following a sharp decline since last week amid hopes for de-escalation in the US-Iran conflict. No concrete progress has been made yet, but markets remain cautiously optimistic that the Middle East situation will not escalate further, for now at least.
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Growing Fed rate hike bets rocked Asian markets, with JGB yields rising, yen near 160, and bitcoin below $69,000.
Treasury yields climbed back to multi-year highs this week, reviving fears of sticky inflation and fiscal deficits that had been pushed aside.
New York Fed President John Williams said inflation remains too high and the Fed needs to tighten further, supporting expectations for a December rate hike.
Bitcoin traded near $71,200 after hitting a fresh session low of $71,000, as the 10-year yield stayed above 5% and stocks dipped.