Sydney, March 14 (BNA): Most stock markets stabilized and oil fell, while bond markets braced for higher interest rates in the United States and the United Kingdom this week.
S&P 500 stock futures rose 0.5%, while Nasdaq futures rose 0.4%. EUROSTOXX 50 futures are up 0.5%, FTSE futures are up 0.2%.
Tokyo’s Nikkei rose 0.9%, but MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 1.6% on losses in China.
Chinese blue-chip stocks fell 1.7 percent after a jump in coronavirus cases shut down the southern city of Shenzhen and fueled speculation about more political easing, according to Reuters.
Bonds elsewhere remained under pressure after being battered last week as higher commodity prices appeared to boost inflation further, with 10-year Treasury yields rising four basis points to 2.04%.
Notably, a key gauge of US inflation expectations has risen to 3% and is close to record levels.
This only reinforced expectations that the Fed will raise interest rates by 25 basis points at its policy meeting this week and point to more by members’ “pop-up” expectations.
“Points are likely to essentially aggregate around four or five highs in 2022, up from three previous highs, given the strongest pace of inflation since the January FOMC meeting,” said Kevin Cummins, chief US economist at NatWest Markets. .
“We suspect we may also get an appendix on how the Fed plans to trim the balance sheet as early as this week.”
The Bank of England is expected to raise interest rates to 0.75% on Thursday, the third straight hike, and the sign further with the market pricing in 2% by the end of the year.
Fed Fund futures are pointing to at least six or seven hikes this year to around 1.75%, putting the US dollar supported near the highest level since May 2020.
The euro was stuck at $1.0905, not far from a 22-month low of $1.0804, while the dollar hit a five-year high against the yen at 117.87.
The Bank of Japan is seen lagging far behind other major central banks in tightening policy.
“The yen has not been able to display typical safe haven attributes, due in part to the surge in US yields and the BOJ yield curve control policy that is blocking JGBs after a rally in core global yields,” said Rodrigo Cattrell.
“Japan is also a large energy importer which raises concerns about a trade shock from higher energy prices.”
Gold lost some of its charm as a safe haven on Monday, down 0.5% to $1,975 an ounce and off last week’s peak of $2,069.
Brent was last quoted a decrease of $2.13 to $110.54, while US crude fell $2.46 to $106.84.
HF