Asian equities are trading on the backfoot as traders balanced bond-market spill-overs on inflation pricing and monetary tightening concerns ahead of next week’s FOMC. Worth noting that month-end effects are in play, with the USD seeing some selling pressure against major FX pairs yesterday after the Wall Street open. The U.S. yield curve between 20- and 30-years has inverted for the first time since 2020. Early signs of persistent inflation pressures and the possibility of an earlier than anticipated lift-off circle in the developing world shake the global bond markets.
On the China front, traders can see some easing pressure on the property markets. Reports are stating that China Evergrande founder has pledged to repay USD 260mln in bonds. The coal market could feel China’s hand again as China’s State Planner said there is room for continuous adjustments of coal prices. Traders will be looking for liquidity and better fixing prices in today’s session as it will be the last trading day of the month and positioning for next week’s FOMC meeting. So, that means that U.S. rates dynamics and the USD should be monitored closely. Later on Wall Street, the focus will turn to the U.S. Personal Consumption Expenditures Price Index (PCE), personal income/spending and Chicago PMI.
