March 24 (Reuters) – A look at the day ahead in Asian markets from Jamie McGiver.
Asian markets are likely to be the main local drivers on Friday, with Japanese inflation and PMI data at the end of the week unlikely to be another choppy day for US markets on Thursday.
Wall Street rose – although it ended at its own high – but bank shares fell to their lowest levels since 2020; Major parts of the US yield curve have declined, but the three-month/10-year segment is at its flattest and most inverted since 1981; Market-based inflation expectations fell, but Fed expectations fell as well.
Rate markets are now pricing in about 100 basis points for the Fed this year, something Fed Chair Jerome Powell said Wednesday is certainly not the central bank’s base case scenario.
Uncertainty lies in what effect the banking crisis will have on US debt conditions in the coming months, and by extension on economic activity and inflation. As Powell put it bluntly on Wednesday: “We simply don’t know.”
Treasury Secretary Janet Yellen knew she had a second chance on Thursday to calm concerns among investors and the wider public about whether officials would move toward guaranteeing all bank deposits.
She told a House committee that she was prepared to take further action to ensure that bank deposits were safe, a day after a Senate committee told her that blanket insurance was not on the agenda. It may not equal Powell’s assurances — bank stocks still fell — but perhaps sentiment will improve on Friday.
So Asia opens on Friday world shares firmer, lower yields, mix US yield curves, higher global rates after UK and Swiss hikes – but there is a growing sense that a world policy peak is in sight – a rising dollar, And a particularly strong yen.
Japanese annual core inflation is expected to fall sharply from a 41-year high of 4.2% to 3.1% in February as government subsidies for gas and electricity bills ease rising living costs.
But many economists say broad price pressures remain strong across the economy, which could force the Bank of Japan to phase out or end its yield curve control policy soon.
Here are three key developments that could provide more direction to the markets on Friday:
– Japan Consumer Price Inflation (Feb)
– Japan Flash PMI (March)
– Australia Flash PMI (March)
by Jamie McGeever;
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