Asian bonds track US rally; Stocks see muted open
Australian and Japanese notes rose after US data showed job openings hit the lowest since 2021. That lifted Treasuries on Tuesday — sending the 10-year yield down six basis points — and reinforced speculation that the Fed will be able to lower rates this year. Treasury yields were little changed early Wednesday.
Bonds tracked Treasuries higher in early Asia trading on signs of a cooling US labor market that buoyed Federal Reserve rate-cut bets. Stocks struggled to gain traction.
Australian and Japanese notes rose after US data showed job openings hit the lowest since 2021. That lifted Treasuries on Tuesday — sending the 10-year yield down six basis points — and reinforced speculation that the Fed will be able to lower rates this year. Treasury yields were little changed early Wednesday.
Equities fell at the open in Tokyo, but edged higher in Sydney and Seoul. Futures for Hong Kong were also muted. India markets will be in focus after capping their worst day in more than four years as Prime Minister Narendra Modi’s party lost its parliamentary majority.
To Bill Adams at Comerica Bank, the risk of wage-price pressures fueling inflation is falling, which has the Fed breathing easier than a few years ago. That’s probably why Chair Jerome Powell took it in stride when inflation accelerated earlier this year, saying hikes were unlikely, he noted.
“The evidence is accumulating that the Fed should begin easing,” said Ronald Temple, chief market strategist at Lazard.
Back in the US, the recent economic reports have reinforced the notion that investors are increasingly looking beyond the “Goldilocks” narrative toward something a bit more consistent with the flagging trajectory of consumption,” said Ian Lyngen and Vail Hartman at BMO Capital Markets.
“There is nothing to imply that the real economy is on the precipice of a recession, however, rather that a no-landing for the labor market appears less likely than it did during the first quarter,” they noted. “Goldilocks is edging toward the door, but has yet to leave the building.”
To Fawad Razaqzada at City Index and Forex.com, while the job openings data caused bond yields to fall, this has been offset by concerns over economic and earnings growth.
“Thus, stocks have not responded in the usual way of cheering on weaker-than-expected data,” he noted. “The questions, are we finally headed for a long overdue correction now? The S&P 500 outlook is not bearish yet from a technical viewpoint, but the potential is there for that to change in the coming days.”
Oil extended losses after an industry report pointed to an increase in US crude stockpiles, adding to bearish sentiment. Copper slid below $10,000. Bitcoin topped $70,000.
Also Read: Trade Setup for June 5: Nifty faces uncertainty after Lok Sabha election results
Australian and Japanese notes rose after US data showed job openings hit the lowest since 2021. That lifted Treasuries on Tuesday — sending the 10-year yield down six basis points — and reinforced speculation that the Fed will be able to lower rates this year. Treasury yields were little changed early Wednesday.
Equities fell at the open in Tokyo, but edged higher in Sydney and Seoul. Futures for Hong Kong were also muted. India markets will be in focus after capping their worst day in more than four years as Prime Minister Narendra Modi’s party lost its parliamentary majority.
To Bill Adams at Comerica Bank, the risk of wage-price pressures fueling inflation is falling, which has the Fed breathing easier than a few years ago. That’s probably why Chair Jerome Powell took it in stride when inflation accelerated earlier this year, saying hikes were unlikely, he noted.
“The evidence is accumulating that the Fed should begin easing,” said Ronald Temple, chief market strategist at Lazard.
Back in the US, the recent economic reports have reinforced the notion that investors are increasingly looking beyond the “Goldilocks” narrative toward something a bit more consistent with the flagging trajectory of consumption,” said Ian Lyngen and Vail Hartman at BMO Capital Markets.
“There is nothing to imply that the real economy is on the precipice of a recession, however, rather that a no-landing for the labor market appears less likely than it did during the first quarter,” they noted. “Goldilocks is edging toward the door, but has yet to leave the building.”
To Fawad Razaqzada at City Index and Forex.com, while the job openings data caused bond yields to fall, this has been offset by concerns over economic and earnings growth.
“Thus, stocks have not responded in the usual way of cheering on weaker-than-expected data,” he noted. “The questions, are we finally headed for a long overdue correction now? The S&P 500 outlook is not bearish yet from a technical viewpoint, but the potential is there for that to change in the coming days.”
Oil extended losses after an industry report pointed to an increase in US crude stockpiles, adding to bearish sentiment. Copper slid below $10,000. Bitcoin topped $70,000.
Also Read: Trade Setup for June 5: Nifty faces uncertainty after Lok Sabha election results
(Edited by : SonalMohan Jadhav)
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