[1/2]Investors look at a stock information board at a securities company office in Beijing, China, on October 8, 2018.REUTERS/Jason Lee/File Photo Obtaining license rights
Oct. 30 (Reuters) – Wayne Cole discusses the future outlook for European and global markets.
It was a cautious start in Asian markets as Israeli forces backed by tanks closed in on northern Gaza with ground attacks, prompting international calls to protect civilians.
But oil prices are actually falling and U.S. stock futures are firm, suggesting investors are betting that the conflict will not escalate or disrupt oil supplies, at least for the time being. There is.
The Nikkei Stock Average (.N225) took the biggest hit, with some speculating that the Bank of Japan would adjust or abandon its yield curve control policy when its two-day policy meeting concludes on Tuesday.
It seems almost certain that the central bank will revise its inflation forecasts upward, but given that it spent billions of dollars last week to keep the 10-year yield below 1%, the central bank is unlikely to push the 10-year yield further. Analysts are divided on whether to take action to allow it to rise.
The yield stood at 0.88% as of Monday, up 11 basis points so far this month, a big move for the market and putting pressure on the Bank of Japan to further raise the cap or widen the trading range for the yield. There is.
Most of the topics will remain on hold for now, but we will discuss laying the groundwork for the eventual transition.
Major financial institutions such as Japan’s Dai-ichi Life Insurance Co. expect a change in Bank of Japan policy early next year, and a Reuters poll found nearly two-thirds of economists expect the Bank of Japan to end negative interest rates in 2024. There is.
Any correction would likely push Japanese yields higher and add to the pain being felt in the U.S. bond market. In the U.S. Treasury market, the yield on the 10-year note rose to 4.87% on Monday with little sign of a safe-haven bid.
Instead, dealers are concerned about how much new issuance the Treasury will announce in this week’s refund, an increase that is almost certain given the government’s borrowing needs.
Analysts at NatWest Markets expect marketable debt to rise to $885 billion in the fourth quarter, rising to $700 billion in the first quarter. In the 2s, 5s, and 10s, he is expected to increase by $3 billion; in the FRN, 3s, and 30s, he will increase by $2 billion; It is.
The July 31 announcement that third-quarter funding requirements were $1.007 trillion caused significant anxiety in the bond market, leading to a surge in bids.
It’s also worth noting that borrowing continued to rise, even though the strong economy surprised everyone. Nominal GDP grew at a staggering 8.5% annual rate in the third quarter, the kind of pace that China once boasted and a pace that would normally produce a bumper crop of tax revenues.
With market borrowing costs rising sharply, analysts are confident the Fed will take a stand at this week’s policy meeting, with futures suggesting there is a 97% chance that interest rates will remain between 5.25% and 5.5%. ing.
The market is also pricing in 165 basis points of easing in 2024, starting around mid-2024.
Earnings season continues this week, with numerous announcements from Apple (AAPL.O), Airbnb (ABNB.O), McDonald’s (MCD.N), Moderna (MRNA.O), Eli Lilly (LLY.N), and more. Ru. Financial results so far have been disappointing, contributing to the S&P 500 index (.SPX) retreating into correction territory.
Key trends that may impact the market on Monday:
– Bank of Japan begins two-day policy meeting
– Germany GDP and CPI data, EU business environment
– ECB Vice President Luis de Guindos and National Central Bank President Eric Teddine attended.
・The Ministry of Finance releases borrowing estimates for the fourth and first quarters of 2024.
Report by Wayne Cole.Edited by Muralikumar Anantharaman
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