- Fed’s Waller downgrades CPI to one number
- Beijing enacts real estate support, COVID steps
- Biden to meet Xi Jinping at G20 meeting
SYDNEY, Nov 14 (Reuters) – Asian shares were mixed on Monday, with a top U.S. central banker warning investors not to get carried away by an inflation data, while Chinese shares rallied on signs of the country’s battered property sector rose with aid.
U.S. inflation fell slightly, enough to send two-year U.S. Treasury yields down 33 basis points this week and the dollar down nearly 4 percent — the fourth-biggest weekly drop since the era of free-floating currencies began more than 50 years ago.
However, the resulting easing in U.S. financial conditions has not been entirely welcomed by the Fed, with Governor Christopher Waller saying the bank needs a series of soft reports to ease the brakes.read more
Waller added that the market is well ahead of itself on inflation data, although he did concede that the Fed could now start thinking about a slower pace of rate hikes.
Futures bet on a half-point rate hike in December to 4.25-4.5%, before moving a few 25 percentage points in the 4.75-5.0% range to the peak.
The two-year Treasury yield edged up to 4.42% after falling as low as 4.29% on Friday.
“The unexpected downturn in CPI is consistent with a broad set of indicators pointing to a decline in global inflation, which should encourage a slowdown in the pace of monetary policy tightening by the Fed and elsewhere,” said Bruce Kassman, head of economic research at JPMorgan.
“This positive message needs to be tempered by recognizing that the decline in inflation is too small for the central bank to declare mission accomplished and that further policy tightening is likely.”
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 1.1% after gaining 7.7% last week.
Japan’s Nikkei (.N225) fell 0.8%, while South Korea (.KS11) was flat. S&P 500 futures fell 0.3% and Nasdaq futures fell 0.5%.
EUROSTOXX 50 futures were up 0.4%, while FTSE futures were up 0.1%.
Reports have emerged that regulators have asked financial institutions to provide more support to stressed property developers, and traders are waiting to see if Chinese stocks can extend their sharp gains.read more
The China Real Estate Index (.CSI000952) jumped 5%. Blue chips (.CSI300) rose 1.1%, helped by a series of changes in China’s COVID-19 restrictions, even as the country reported more cases over the weekend.read more
Ray Attrill, head of FX strategy, said: “From an economic standpoint, it’s hard to see case news as negative, but it’s a symbol of movement in a zero-COVID strategy that markets are happy to seize, no matter how Small.” at National Bank.
U.S. President Joe Biden will meet Chinese leader Xi Jinping in person on Monday for the first time since he took office, with U.S. concerns over Taiwan, Russia’s war in Ukraine and North Korea’s nuclear ambitions at the top of his agenda.read more
News of the COVID rules sparked a short-covering rally in the yuan, adding to broad pressure on the dollar as yields fell. The yuan rose 1.4 percent on Monday, its biggest gain since 2005.
The dollar index edged up to 106.920 on Monday, but was still well below last week’s high of 111.280.
The euro retreated slightly to $1.0308 after gaining 3.9% last week, while the dollar firmed at $139.49 after falling 5.4% last week.
The dollar fell almost equally against the Swiss franc, in part after the SNB warned it would use interest rates and currency purchases to tame inflation.read more
Sterling retreated to $1.1755 ahead of the Prime Minister’s autumn statement on Thursday, in which he is expected to lay out plans for tax hikes and spending cuts.read more
Cryptocurrencies remain under pressure as at least $1 billion in customer funds reportedly vanished from collapsed cryptocurrency exchange FTX.read more
Bitcoin fell 1.5% to $16,055, having lost nearly 22% last week.
The dollar’s recent pullback provided a much-needed boost to commodities, with gold holding at $1,760 an ounce after gaining more than $100 last week.
Oil futures extended gains on hopes of a pick-up in Chinese demand, with Brent rising 28 cents to $96.27, while U.S. crude gained 20 cents to $89.16 a barrel.
Reporting by Wayne Cole; Editing by Shri Navaratnam and Kenneth Maxwell
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