Asia equities are higher in early trade following the positive trade from Wall Street, where the tech and growth sectors outperformed. At the same time, global markets were also unfazed by firmer US Consumer Price Index and FOMC Minutes. Traders will be digesting the inflation data for September, where the CPI YY eased at 0.7% against expected 0.9%, but Chinese PPI YY rose at 10.7% versus 10.5% expected, the August reading came at 9.5%. Data that showed factory places rose at the fastest pace since 1995 and China stats bureau says increasing coal and other prices had an impact on PPI. It could cause another wave of China’s intervention in the commodity markets to ease the upside trend in prices.
On the policy front, the September FOMC meeting put traders on notice that if progress on its economic goals continues as expected, a reduction in the pace of asset purchases may soon be justified. The process of bond tapering could begin in either mid-November or mid-December, the FOMC said. Its illustrative tapering path would feature monthly reductions in the pace of asset purchases, by USD 10bln US Treasuries and USD 5bln MBS; purchases would end around the middle of next year. Next up, traders will pay attention to the global macro dynamics after the FOMC Minutes with US initial jobless claims on the radar ahead of US retail sales on Friday.
