Domestic Bonds

Decline in US futures, stable stocks; Bond yields jump: market envelope


(Bloomberg) – Asian stocks started the week on a mixed bag, with investors weighing strong corporate earnings against worries about inflation and the economic recovery.

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Benchmarks edged up in Japan and fluctuated in Australia and South Korea. US contracts fell after Wall Street stocks rose on Friday, with the S&P 500 posting its best week since July as earnings boosted sentiment.

Bond yields in New Zealand and the Kiwi dollar rose after New Zealand inflation accelerated at the fastest rate in 10 years. Yields on three-year Australian bonds jumped more than 10 basis points. Treasury yields continued their ascent, while the dollar was stable.

China’s gross domestic product for the third quarter, due Monday, as well as monthly industry and investment data will be closely monitored to assess the severity of power shortages. Meanwhile, People’s Bank of China Governor Yi Gang has said authorities can contain the risks posed to the Chinese economy and financial system by the struggles of the China Evergrande group.

Energy prices continued to advance, with West Texas Intermediate crude oil surging above $ 83 per barrel, its highest since 2014. Brent topped $ 85 per barrel, the highest since 2018. Bitcoin topping 61 $ 000 as the first US Bitcoin futures ETF could debut on Monday.

Despite the risk-oriented tone, investors continue to worry about inflation amid energy shortages leading to further production cuts. At the same time, the economic recovery remains uneven as central bankers move closer to cutting stimulus. US consumer confidence unexpectedly fell in early October, but retail sales rose.

“The sentiment has really gotten pretty bearish,” Kyle Rodda, IG Group market analyst, told Bloomberg Television. “Markets feel reasonably emboldened that we are likely to see reasonably strong results from US companies this quarter. But the longer-term problem remains what’s happening with the global supply shock caused by the pandemic, the resulting inflationary pressure, and the very fine line that the Fed is walking in trying to reduce these inflation risks, while at the same time, do not infringe on the recovery or undermine the strength of financial markets. “

Bank of England Governor Andrew Bailey said the central bank “should act” to curb inflationary forces and warn that higher energy costs would mean price pressures will persist. Mohammed El-Erian, chief economic adviser to Allianz SE and Bloomberg columnist, said investors should prepare for increased market volatility if the Federal Reserve withdraws the stimulus measures implemented by the Covid pandemic. 19.

Among US earnings, Goldman Sachs Group Inc., Charles Schwab Corp. and Alcoa Corp. reported positive results.

For more market analysis, read our MLIV blog.

Events to follow this week:

  • Profits are piling up, especially at AT&T Inc., Barclays Plc, Johnson & Johnson, Netflix Inc. and Tesla Inc.

  • China releases retail sales, industrial production and GDP data on Monday

  • Bank of Indonesia rate decision and briefing, Tuesday

  • China’s AFN Standing Committee begins a meeting on Tuesday that will continue until October 23. A review of anti-monopoly regulations is on the agenda

  • Housing starts in the United States, Tuesday

  • EIA Crude Oil Inventory Report, Wednesday

  • China real estate prices, preferential loan rates, Wednesday

  • U.S. Conference Board leading index, U.S. existing home sales, jobless claims, Thursday

  • Fed Chairman Jerome Powell participates in policy roundtable on Friday

Some of the main movements in the markets:

Actions

  • S&P 500 futures fell 0.2% at 9:01 am in Tokyo. The S&P 500 rose 0.8%

  • Futures on the Nasdaq 100 slipped 0.3%. The Nasdaq 100 rose 0.6%

  • The Topix index has changed little

  • The S & P / ASX 200 Index changed little

  • The Kospi index fell by 0.4%

  • Hang Seng index futures soared 0.6% earlier

Currencies

  • The Japanese yen was at 114.30 per dollar, down 0.1%

  • The offshore yuan was at 6.4323 per dollar

  • The Bloomberg Dollar Spot Index changed little

  • The euro was at $ 1.1598

Obligations

Merchandise

  • West Texas Intermediate crude rose 0.9% to $ 83.06 a barrel

  • Gold was at $ 1,770.05 an ounce, up 0.1%

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