Asian equities follow suit to the choppy price action in global counterparts amid inflationary concerns after US Consumer Price Index data printed its highest since 2008. In Wall Street, stocks fell, bonds sold off, and the US dollar gained against G10 and EM currencies. It is a clear signal of market reaction before the Federal Reserve starts engaging in stimulus tapering in the quarters ahead. Today’s radar is the remarks due from Fed Chair Powell in Congress. For the session ahead worth paying attention to the FICC and equity complex as Asian participants could cut some of their exposure on high duration assets and high yield exposure as traders could move some of their position to quality assets, and the “reflation trade” could gain fuel in the coming weeks.
Worth paying attention to the pandemic worries as Australia’s New South Wales Premier announced extending the Sydney lockdown for at least two more weeks. On the trade front, the White House will warn US companies about the growing risk of operating within Hong Kong; according to reports, the risks involve the Chinese government’s ability to access data that foreign companies store in Hong Kong.
