Asian equities fell on the open amid concerns that the recovery from the pandemic will slow as elevated inflation forces tighter monetary policy. On Wall Street, U.S. futures rose after the tech-heavy Nasdaq 100 touched an intraday record after easing on U.S. Treasury yields. However, price action on currency and fixed income might start to become choppy. Participants are now preparing for the FOMC meeting next week, where the Fed could announce its bond tapering.
On the Geopolitical front, reports note that Taiwan’s President says the threat from China is increasing ‘every day’ and confirms the presence of U.S. troops on the island. This theme has been on the radar for months now; participants might start to see some tail risk if the situation continues to escalate. Participants now look to the Bank of Japan rate decision and Outlook Report. The BoJ is expected to keep its policy settings unchanged, with rates at -0.10% and a 10-year JGB yield target at 0%. Participants will be watching a possible dovish ECB later today, which could try to ease the market’s expectations on rate hikes and bond tapering anxiety, alongside advanced U.S. Q3 GDP.
