(Reuters) – A look at Asian markets today from Louis Krauskow
Investors do not appear to be waiting for this week’s series of central bank meetings before taking any steps.
While the holidays in Tokyo and London may mean global trading has been fairly quiet, that didn’t stop interest rates from continuing to climb to fresh highs on Monday.
The yield on the US 10-year bond reached its highest level since 2011, touching 3.518%, although it declined afterwards. Despite the new breakthrough in bonds, stocks managed to post gains, offering a 0.7% increase and a rebound after losing 4.8% last week.
Eurozone bond yields also rose, with the German 10-year yield hitting its highest level since June.
Investors are preparing for central bank action. The Fed meeting begins on Tuesday, although important news will come on Wednesday with his statement and President Jerome Powell’s press conference. A rate hike of 75 basis points is expected, with markets pricing in a one in five chance of a full percentage point increase.
Meanwhile in Japan, we see the BoJ maintain its accommodative policy when it meets later this week, which could add to pressure on the yen’s weakness. The currency recently fell to a 24-year low against the dollar.
The focus in Asia on Tuesday turns to China, where a decision on record lending rates is due. In a Reuters poll, 75% of market participants expected no change to either the one-year or five-year base loan rate.
The authorities are seen to postpone monetary easing in order to avoid further consumption pressure on the yuan. The currency closed at a 26-month low on Monday and traded below the critical 7 per dollar level.
Key developments that should provide further guidance to the markets on Tuesday:
China loan base interest rate decision for one year and five years
Japan CPI (August)
Taiwan Export Orders (August)
US Housing Starts (August)