Connect with us

Hi, what are you looking for?

Economy

Morning Bid: Bracing for higher US yields, dollar, inflation

By Jamie McGeever

(Reuters) – A look at the day ahead in Asian markets. 

Investors in Asia wake up on Thursday to a global market landscape redrawn by Donald Trump’s resounding U.S. election victory that has propelled Wall Street to new highs and sparked a huge surge in the dollar and U.S. bond yields.

Any appetite for ‘risk on’ trades in sympathy with the U.S. equity rally will be largely offset, perhaps completely snuffed out, by tighter financial conditions from the rise in Treasury yields and the dollar.

Emerging market currencies fell across the board in Wednesday’s global session – Mexico’s peso slumped as much as 3% before recovering – and Asian exchange rates could come under heavy selling pressure on Thursday too.

Depending on the speed and extent of the selloff, some central banks may feel forced to intervene. The central banks of India and Indonesia, for example, have intervened in the FX market already this year to support their weak currencies.

At one point earlier on Wednesday the U.S. dollar was up nearly 2% on an index basis, which would have been its biggest one-day rise since June 24, 2016 – the day after the Brexit referendum, which sank sterling.

The dollar gave back some gains and Treasuries clawed back some of their heavy losses late on Wednesday, as the huge spike in yields attracted strong demand at an auction of 30-year bonds.

Will investors in Asia on Thursday stick with the so-called ‘Trump trades’ – bets linked to higher federal spending, deficits and inflation, and greater deregulation – or will they exert restraint, and await more attractive levels to re-enter?

Among the biggest moves of Wednesday’s session was bitcoin’s rise of almost 10% to a record high of $75,459 as investors bet on the Trump administration implementing policies that will help cement cryptocurrencies’ place in the financial ecosystem.

As if the U.S. election tumult wasn’t enough, the Federal Reserve announces its interest rate decision on Thursday after a two-day meeting. This could provide investors with the cover to reduce risk exposure and trade more defensively on Thursday.

Perhaps fittingly, the first full day of market trading in Asia following Trump’s victory sees the release of Chinese trade and foreign exchange reserves data.

China has been the main target of Trump’s fiery rhetoric about global trade and how the US has suffered from unfair practices practiced by Beijing. He has said imports from China will be subject to tariffs of 60%, perhaps even higher.

Official figures on Thursday are expected to show that export growth accelerated in October to an annual rate of 5.2%, boosted by steep discounts, while imports likely shrank 1.5%, according to a Reuters poll.

Thursday’s calendar also includes the latest Australian trade figures, GDP data from the Philippines, and second-quarter earnings from Japan’s Nissan (OTC:NSANY).

Here are key developments that could provide more direction to markets on Thursday:

– Further reaction to U.S. presidential election 

– China trade (October)

– Philippines GDP (Q3)

This post appeared first on investing.com

Enter Your Information Below To Receive Free Trading Ideas, Latest News And Articles.






    Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

    You May Also Like

    Editor's Pick

    Former president Donald Trump and his allies have filed hundreds of lawsuits, with more to come, seeking to tighten voting rules or disqualify voters....

    Economy

    LONDON (Reuters) – Bank of England interest rate-setter Megan Greene said she still believed the central bank should take a cautious approach to cutting...

    Editor's Pick

    Sister Stephanie Schmidt had a hunch about what her fellow nuns would discuss over dinner at their Erie, Pennsylvania, monastery on Wednesday night. The...

    Latest News

    Warner Bros. Discovery said Thursday its streaming platform Max added 7.2 million global subscribers in the third quarter. It marked the biggest quarterly growth for...

    Disclaimer: beneficialinvestmentnow.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.


    Copyright © 2024 beneficialinvestmentnow.com