Asian equities could trade mixed as Wall Street stocks felt pressure from rising global bond yields and energy prices, with the tech sector leading losses. It is worth noting that short-term price action has been mixed due to month-end/quarter-end rebalancing. Although data might bring some volatility intraday, core positioning could only be back next week before the US earning sessions and the US Nonfarm Payrolls data as traders are eyeing how aggressive the Fed could be.
For now, traders are keeping an eye on the US economy and the Federal Reserve policy, so increasing positioning to risk assets like Asian equities, the debt market and even high-yielding FX has not shown any strong inflows recently. On that note, this week’s highlight is the US Personal Consumption Expenditures Price Index data for May and the ISM Manufacturing report – both data sets are released at the back end of the week. These data points could be key as traders could look for any driver to repricing the Fed policy. It is worth recognising that May’s US Consumer Price Index data was an upside surprise, leading the Fed to fire a larger-than-expected rate hike at this month’s meeting.
