(Bloomberg) — Treasuries slipped and gold fell from session highs on Monday, as markets pared some of the Friday moves that defied Federal Reserve Chair Jerome Powell’s reminder that policymakers are in no hurry to cut interest rates.
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Yields rose across tenors in Treasuries, with those of the benchmark 10-year trading around 4.25%. US government bonds had rallied Friday as swaps priced in a reduction by May, even after Powell said the central bank is ready to hike further if needed, while also noting that policy is “well into restrictive territory.”
Meanwhile, gold slipped from earlier intraday highs, trading around $2,085.34 an ounce and still on track for a record close. Bitcoin climbed nearly 3% to the highest since April 2022, continuing its multi-month rise on expectations of new exchange-traded fund approvals in the US. Asian shares were mixed, with gains in Australian and Korean stocks, while Japanese equities fell. S&P 500 futures were steady.
“We are in a zone of uncertainty” with lots of economic data ahead before the Fed’s policy meeting next week, said Tom Lee, head of research of Fundstrat, in a note Sunday. “Markets might be consolidating,” he added, but “we think dip buying prevails and December is an up month” for US equities.
Hong Kong and mainland China stocks were on the back foot. Shares of distressed developer China Evergrande Group, however, surged as much as 22% after a Hong Kong court again postponed a decision on whether the world’s most-indebted property developer should be wound up.
Oil traded lower amid sustained skepticism that the latest supply cuts by OPEC+ will turn the market’s tide.
Sticky Inflation
This week, traders will be monitoring for clues to the health of the global economy with Australian growth, Chinese inflation and US non-farm payrolls data all due. The Reserve Bank of Australia is expected to sound hawkish as it keeps its rate on hold on Tuesday after governor Michele Bullock warned inflation is now homegrown.
While the cooler-than-expected inflation will keep the RBA on hold, “sticky ‘homegrown’ services inflation will ensure a tightening bias is retained,” Tony Sycamore, an analyst at IG Group in Sydney, wrote in a note to clients. “A rate hike in February hinges on the outcome of the December quarter inflation due for release in late January.”
US 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 deal valued at $1.9 billion.
Investors will also keep watch 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.
Key events this week:
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Riskbank November meeting minutes released, Monday
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US factory orders, durable goods, Monday
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Reserve Bank of Australia rate decision, Tuesday
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Japan’s Tokyo CPI, Tuesday
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China Caixin services PMI, Tuesday
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South Korea CPI, GDP, Tuesday
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Eurozone PMIs, Tuesday
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Australia GDP, Wednesday
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Eurozone retail sales, Wednesday
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Bank of Canada rate decision, Wednesday
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China trade, FX reserves, Thursday
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Eurozone GDP, Thursday
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Germany industrial production, Thursday
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US wholesale inventories, initial jobless claims, Thursday
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Japan household spending, GDP, Friday
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US non-farm payrolls, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures fell 0.1% as of 1:51 p.m. Tokyo time. The S&P 500 rose 0.6% Friday
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Nasdaq 100 futures fell 0.3%. The Nasdaq 100 rose 0.3%
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Japan’s Topix index fell 0.6%
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Hong Kong’s Hang Seng Index fell 0.6%
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China’s Shanghai Composite Index was little changed
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Australia’s S&P/ASX 200 Index rose 0.8%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro fell 0.1% to $1.0873
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The Japanese yen was little changed at 146.76 per dollar
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The offshore yuan fell 0.3% to 7.1425 per dollar
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The Australian dollar fell 0.3% to $0.6658
Cryptocurrencies
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Bitcoin rose 2.8% to $40,853.95
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Ether rose 1.9% to $2,225.72
Bonds
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The yield on 10-year Treasuries advanced six basis points to 4.25%
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Japan’s 10-year yield declined one basis point to 0.690%
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Australia’s 10-year yield declined three basis points to 4.46%
Commodities
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West Texas Intermediate crude fell 0.7% to $73.56 a barrel
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Spot gold rose 0.6% to $2,085.06 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Michael G. Wilson.
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