(Bloomberg) — Treasury bonds slipped and gold fell from session highs on Monday as markets pared back some of Friday’s moves that defied Federal Reserve Chairman Jerome Powell’s reminder that policymakers are in no hurry to raise interest rates reduce.
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Treasury yields rose across all maturities, with the benchmark 10-year Treasury yield at around 4.25%. U.S. Treasuries rallied on Friday as swaps priced in a tapering by May, even after Powell said the central bank was prepared to raise interest rates further if necessary, while noting that policy was “well in hawkish territory.”
Meanwhile, gold slipped from previous intraday highs to settle at around $2,085.34 an ounce, still on track for a record close. Bitcoin climbed nearly 3% to its highest level since April 2022, extending its multi-month rise on expectations of new U.S. exchange-traded fund approvals. Asian stocks performed mixed, with Australian and Korean stocks gaining while Japanese stocks fell. S&P 500 futures were stable.
“We are in a zone of uncertainty” with a lot of economic data ahead of the Fed’s policy meeting next week, Fundstrat research director Tom Lee said in a note on Sunday. “Markets could be consolidating,” he added, but “we believe dip buying will prevail and December is a bullish month” for U.S. stocks.
Hong Kong and mainland Chinese stocks fell behind. However, shares in troubled developer China Evergrande Group rose as much as 22% after a Hong Kong court again postponed a decision on whether to wind up the world’s most indebted real estate developer.
Oil traded lower amid continued skepticism that recent OPEC+ supply cuts will turn the market tide.
The story goes on
Sticky inflation
This week, traders will be looking for clues about the health of the global economy as Australian growth, Chinese inflation and US non-farm payrolls data are due. The Reserve Bank of Australia is expected to set a hawkish tone as it leaves its key interest rate unchanged on Tuesday after Governor Michele Bullock warned that inflation was now of its own making.
While weaker-than-expected inflation will keep the RBA on hold, “stubborn ‘homegrown’ services inflation will ensure a tightening bias is maintained,” Tony Sycamore, an analyst at IG Group in Sydney, wrote in a note to clients . “A rate hike in February will depend on the December quarter inflation outcome, which is due to be published at the end of January.”
U.S. airline stocks will be in focus when Wall Street reopens Monday after Alaska Air Group Inc. agreed to buy rival Hawaiian Holdings Inc.’s Hawaiian Airlines in a $1.9 billion deal.
Investors will also keep an eye on geopolitical tensions in the Middle East. Israel has resumed its military operation in Gaza, a US warship was attacked in the Red Sea and Houthi rebels in Yemen said they had carried out operations against two Israeli ships.
Important events this week:
The minutes of Riskbank’s November meeting were published on Monday
US factory orders, durable goods, Monday
Reserve Bank of Australia interest rate decision, Tuesday
Japan’s CPI for Tokyo, Tuesday
China Caixin Services PMI, Tuesday
South Korea CPI, GDP, Tuesday
Eurozone PMIs, Tuesday
Australia’s GDP, Wednesday
Eurozone retail sales, Wednesday
Bank of Canada interest rate decision, Wednesday
China trade, foreign exchange reserves, Thursday
Eurozone GDP, Thursday
Germany’s industrial production, Thursday
US wholesale inventories, initial jobless claims, Thursday
Japanese household spending, GDP, Friday
US non-farm payrolls, consumer sentiment at the University of Michigan, Friday
Some of the key moves in the markets:
Shares
S&P 500 futures fell 0.1% at 1:51 p.m. Tokyo time. The S&P 500 rose 0.6% on Friday
Nasdaq 100 futures fell 0.3%. The Nasdaq 100 rose 0.3%
Japan’s Topix index fell 0.6%
Hong Kong’s Hang Seng Index fell 0.6%
China’s Shanghai Composite Index was little changed
Australia’s S&P/ASX 200 index rose 0.8%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro fell 0.1% to $1.0873
The Japanese yen was little changed at 146.76 per dollar
The offshore yuan fell 0.3% to 7.1425 per dollar
The Australian dollar fell 0.3% to $0.6658
Cryptocurrencies
Bitcoin rose 2.8% to $40,853.95
Ether rose 1.9% to $2,225.72
Tie up
The 10-year Treasury yield rose six basis points to 4.25%
Japan’s 10-year yield fell one basis point to 0.690%
Australia’s 10-year yield fell three basis points to 4.46%
raw materials
West Texas Intermediate crude fell 0.7% to $73.56 a barrel
Spot gold rose 0.6% to $2,085.06 an ounce
This story was produced with support from Bloomberg Automation.
– With assistance from Michael G. Wilson.
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