A man walks past an electronic board displaying stock visualizations outside a brokerage firm in Tokyo, Japan, March 17, 2023.Reuters/Androniki Christodoulou/File Photo
Aug 2 (Reuters) – Financial markets columnist Jamie McGeever looks ahead to the future of Asian markets.
A ‘pain trade’ between US Treasuries and the dollar doubled will put Asian markets on the defensive on Wednesday, but investors are also bracing for South Korea’s inflation data and an expected rate hike from the Bank of Thailand.
10-year yields climbed above 4.0% for the first time since November and 30-year yields climbed above 4.10% for the first time since November after U.S. Treasuries fell on Tuesday, pushing the dollar higher and lowering investor risk appetite on day one. . new month.
Several indicators, from customer surveys of Wall Street’s big banks to futures market positioning data, suggest that investors are not in that position. A move like Tuesday would be damaging as they tend to be “long” Treasuries and “short” the dollar.
They also fell in some major Asia-Pacific markets, notably Japanese assets after the Bank of Japan’s policy adjustment and the Australian dollar after the country’s central bank kept its policy rate unchanged at 4.10%. It will add to the apparent volatility and uncertainty.
The 1.6% fall in the Australian dollar against the US dollar on Tuesday was the biggest drop since the US regional bank shock in early March. The yen has fallen nearly 4% since the Bank of Japan adjusted its seven-year “yield curve control” policy on Friday.
Will US investors bring their money home? If that happens, Asian and emerging markets will come under further selling pressure.
Earnings season in the United States hit its peak this week, with more than 100 companies, including tech giants Apple and Amazon, making announcements on Thursday. Results on Tuesday were mixed, with macro factors likely to dictate direction.
The Asian economic and policy calendar on Wednesday will be dominated by the Bank of Thailand’s 25 basis points rate hike to 2.25%, which will mark the end of the tightening cycle.
But analysts expect the first rate cut not until 2025. Inflation has fallen to 0.23%, well below the central bank’s target range of 1-3%, but policymakers expect prices to rise again later this year.
Meanwhile, South Korea’s annual inflation rate in July is expected to slow to 2.40% from 2.70% the previous month. If so, it would be the slowest pace since June 2021 and a significant slowdown from its peak of 6.30% a year ago.
Here are the key developments that could give the market more direction on Wednesday:
– Thai interest rate decision
– Korea CPI Inflation Rate (July)
– Singapore Manufacturing PMI (July)
By Jamie McGever.Editing: Deepa Babington
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