Asian equities could trade choppy as global peers traded volatile in the wake of the hotter-than-expected US Consumer Price Index data, which saw traders ramp up hawkish pricing from the Fed at the July meeting. Fed funds futures now point over a 75% chance of a 100bp hike, which is heavily up from the near 0% chance before the data, while Fed’s Bostic said: “everything is on the table” when asked about such a move. It is worth noting that the Fed goes into a media blackout at midnight Friday, so all Fed speakers by then could be a risk event by itself as markets now start to price a potential 100 bps rate hike.
For the session ahead, global participants will be waiting for the US June Producer Price Index later in the session to see if the report could support a more aggressive action by the FOMC this month. Traders will be watching the US earnings season picks up with JP Morgan and Morgan Stanley reporting early today and Bank of NY Mellon, Wells Fargo, Citi Group, Blackrock, State Street and US Bancorp on Friday.
