Asian markets could trade sideways as global indices traded somewhat flat with particular pressure on Netflix (NFLX), -35%, after earnings reports showing that the streamer lost over 200,000 subscribers. Worth noting that a pullback on US yield also supported the initial upside on equities. US yields reversed the entirety of Tuesday’s move higher when participants started to look to buy and started adding some duration exposure after a strong sell-off.
Worth keeping a close eye on how the global bond and FX markets, especially the USD, vs low-yielding currencies like the Yen and EUR. In a rate-sensitive market, technical flows could play a key role in the intraday pricing of risk assets. Inflation trades seem to show early signals that it is reaching its plateau as US longer-term inflation expectations have plunged from Tuesday’s highs but remain elevated, with the 5y5y inflation swap trading at 2.79% and the 5y5y breakeven at 2.54%. For the session ahead, highlights include New Zealand CPI, Australian Retail Sales and Japan Enhanced Liquidity Auction for JGBs. Fed Chair Powell speaks tomorrow as part of an IMF panel with ECB President Lagarde, the last scheduled Fed speak before the media blackout starting Friday at midnight.
