Dollar and Treasury Yields Rise on Fed Waller: Market Recap

(Bloomberg) – The dollar and Treasury yields rose after Federal Reserve Governor Christopher Waller warned policymakers had “some way to go” before ending interest rate hikes.

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US equity futures fell while contracts for Europe rose. Asian stocks erased earlier gains, dragged down by Japanese stocks.

The greenback had been on the back before Waller’s comments amid signs of slowing US inflation and the prospect of a dovish tilt from the Fed. November’s preliminary survey from the University of Michigan showed on Friday that US consumers’ inflation expectations rose in the short and long term as sentiment fell.

Treasury yields rose across the curve. Yield gains were also seen in Australia and Japan.

Of course, while Waller said the up cycle would continue for some time, he noted that the Fed might start looking at a 50 basis point cut at the next meeting in December or the one after.

A 16-point plan to boost China’s property market and efforts to reduce the economic cost of the government’s pandemic response have seen Hong Kong and mainland stocks rally. Developer shares led the charge, with Country Garden Holdings Co. jumping a record 55%.

“So many negative news feeds have now been factored into the price,” Catherine Yeung, chief investment officer at Fidelity International, said of China stocks on Bloomberg Television. “It just feels like China has probably had the worst.”

Investors will also keep a close eye on the G20 summit in Indonesia, where US President Joe Biden and Chinese leader Xi are expected to meet. Biden’s hand has been bolstered by Democrats defying political forecasts and historical trends to retain control of the Senate.

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Cryptocurrencies fluctuated as the sector remained under pressure amid growing FTX woes. A rapid fall in the value of FTX’s key crypto assets and unauthorized fund withdrawals after its bankruptcy filing suggest customers are unlikely to recover much of their deposits.

A negative tone prevailed in the Japanese market, with the country’s benchmark stock indexes weighed down by SoftBank Group Corp., which failed to announce a widely expected share buyback.

While US stocks posted their biggest weekly gain since June on Friday, JPMorgan Asset Management prefers to remain cautious for now.

“These bear market rallies can help portfolios recover over the long term,” global market strategist Meera Pandit told Bloomberg Radio. “But at the same time, we don’t want to jump into equities until we have a clearer signal on where the Fed is stopping and then how growth will continue next year. .”

Oil fell after a two-day rally as a stronger dollar offset optimism around the outlook for improving Chinese demand. Gold went down.

Key events this week:

• US President Joe Biden plans to meet Chinese President Xi Jinping on the sidelines of the G-20 on Monday

• The Fed’s John Williams panel of moderators on Monday

• China retail sales, industrial production, jobless survey, Tuesday

• Former US President Donald Trump plans to make an announcement on Tuesday

• Making America’s Empire, PPI, Tuesday

• U.S. business stocks, cross-border investment, retail sales, industrial production, Wednesday

• Fed’s John Williams, Lael Brainard and SEC Chairman Gary Gensler speak Wednesday

• ECB President Christine Lagarde speaks on Wednesday

• Eurozone CPI, Thursday

• US housing starts, first jobless claims, Thursday

• Fed’s Neel Kashkari and Loretta Mester speak Thursday

• US Conference Board leading index, existing home sales, Friday

Some of the major movements in the markets:

Shares

• S&P 500 futures fell 0.3% at 7:01 a.m. London time. The S&P 500 rose 0.9%

• Nasdaq 100 futures fell 0.5%. The Nasdaq 100 rose 1.8%

• The Hang Seng index rose 1.7%

• The Shanghai Composite Index fell 0.1%

• Euro Stoxx 50 futures rose 0.4%

• Japan’s Topix index fell 1.1%

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%

• The euro fell 0.2% to $1.0325

• The Japanese yen fell 0.3% to 139.23 per dollar

• The offshore yuan rose 0.7% to 7.0390 to the dollar

Cryptocurrencies

• Bitcoin rose 1% to $16,535.64

• Ether rose 1.1% to $1,229.22

Obligations

• The yield on 10-year Treasury bills rose seven basis points to 3.88%

• The Japanese 10-year yield rose 0.5 basis points to 0.24%

• The Australian 10-year yield rose 11 basis points to 3.76%

Goods

• West Texas Intermediate crude fell 0.4% to $88.58 a barrel

• Spot gold fell 0.5% to $1,761.96 an ounce

This story was produced with assistance from Bloomberg Automation.

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