(Bloomberg) — Treasuries fell and gold fell from session highs Monday, as markets pared some of Friday’s moves that defied Federal Reserve Chairman Jerome Powell’s reminder that policymakers are in no rush to cut interest rates.
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Yields have risen across Treasury bond durations, with benchmark 10-year Treasury yields trading at around 4.25%. US government bonds rose on Friday with swaps priced lower by May, even after Powell said the central bank was prepared to raise interest rates further if necessary, while also indicating that policy was “in restrictive territory.”
Meanwhile, gold fell from its intraday highs, trading around $2,085.34 an ounce and still on track for a record close. Bitcoin rose nearly 3% to the highest level since April 2022, extending a multi-month rally on expectations of new approvals for ETFs in the US. Asian stocks were mixed, with gains in Australian and Korean stocks, while Japanese stocks fell. S&P 500 futures were flat.
“We are in an area of uncertainty” with a lot of economic data ahead of the Fed’s policy meeting next week, Tom Lee, head of research at Fundstrat, said in a note on Sunday. He added: “Markets may be consolidating, but we believe that dip buying is the norm and that December is a bullish month” for US stocks.
Hong Kong and mainland Chinese stocks were in decline. However, shares of troubled Chinese developer China Evergrande Group rose as much as 22% after a Hong Kong court again postponed a decision on whether the world’s most indebted property developer should be liquidated.
Oil trading fell amid lingering doubts that recent supply cuts by OPEC+ will change the direction of the market.
Sticky inflation
This week, traders will be watching for any signs of the health of the global economy with the release of Australian growth, Chinese inflation and US non-farm payrolls data. The Reserve Bank of Australia is expected to look hawkish as it keeps interest rates unchanged on Tuesday after Governor Michelle Bullock warned that inflation is now domesticated.
While cooler-than-expected inflation will keep the RBA on hold, “sticky” domestic “services inflation” will ensure the hawkish bias is maintained,” Tony Sycamore, an analyst at IG Group in Sydney, wrote in a note to clients. “An interest rate hike in February hinges on the December quarter inflation outcome due in late January.”
US airline stocks will be in focus when Wall Street reopens on Monday after Alaska Air Group Inc. to buy rival Hawaiian Airlines subsidiary Hawaiian Holdings Inc. In a deal worth $1.9 billion.
Investors will also be watching geopolitical tensions in the Middle East. Israel resumed its military operation in Gaza, a US warship was attacked in the Red Sea, and Houthi rebels in Yemen said they carried out operations against two Israeli ships.
Main events this week:
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Minutes from Riskbank’s November meeting were released on Monday
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US Factory Orders, Durable Goods, Monday
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Reserve Bank of Australia interest rate decision, Tuesday
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CPI in Tokyo on Tuesday
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China Caixin Services PMI, Tuesday
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South Korea Consumer Price Index, GDP, Tuesday
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Eurozone PMIs, Tuesday
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Australian GDP, Wednesday
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Retail sales in the euro zone, Wednesday
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Bank of Canada interest rate decision, Wednesday
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Chinese trade, foreign exchange reserves, Thursday
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Eurozone GDP, Thursday
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German industrial production, Thursday
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US Wholesale Inventories, Initial Jobless Claims, Thursday
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Japanese household spending, GDP, Friday
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US Nonfarm Payrolls, Consumer Confidence report from the University of Michigan, Friday
Some key movements in the markets:
Stores
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S&P 500 futures were down 0.1% as of 1:51 PM Tokyo time. The S&P 500 rose 0.6% on Friday
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Nasdaq 100 futures fell 0.3%. The Nasdaq 100 rose 0.3%.
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Japan’s Topix index fell by 0.6%.
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The Hang Seng Index in Hong Kong fell by 0.6%.
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There was little change in the Shanghai Composite Index in China
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In Australia, the S&P/ASX 200 rose 0.8%.
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro fell 0.1 percent to $1.0873
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There was little change in the Japanese yen at 146.76 to the dollar
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The yuan in external transactions fell 0.3 percent to 7.1425 per dollar
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The Australian dollar fell 0.3 percent to $0.6658
Digital currencies
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Bitcoin rose 2.8% to $40,853.95
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Ethereum rose 1.9% to $2,225.72
Bonds
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The yield on 10-year Treasury bonds rose 6 basis points to 4.25%.
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The yield on 10-year Japanese bonds fell by one basis point to 0.690%.
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The Australian 10-year bond yield fell three basis points to 4.46%.
Goods
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West Texas Intermediate crude fell 0.7% to $73.56 a barrel
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Spot gold rose 0.6 percent to $2,085.06 per ounce
This story was produced with assistance from Bloomberg Automation.
–With assistance from Michael G. Wilson.
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