Asian equities could take a boost from Wall Street after strong gains seen on US equities amid the drop in US Treasuries yields which supported the tech sectors. In Asia, long-duration sectors like technology could see solid gains. In China, a wave of risk-taking on stocks supported equity flows which remain firm, seeing another inflow of 7.6bn yuan yesterday. It is also worth noting that participants’ attention and positioning are on today’s US Consumer Price Index.
The data could create another big risk-on or risk-off event as positioning is stretched to a dovish side, with US short-term rates easing, USD losing steam and risk assets like equities trading higher. These asset classes could work as core indicators going into the event. Fed Policymakers still need to see substantial evidence to give confidence that inflation was on a sustained downward path. That makes this release very important for the next FOMC meeting by the end of the month.
