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Stocks stalled as oil fuels inflation nerves -Breaking

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© Reuters. FILE PHOTO – An electronic stock quote board is shown inside a Tokyo conference hall on November 1, 2021. REUTERS/Issei Kato

Tom Westbrook

SYDNEY (Reuters – Asian stockmarkets were tense Wednesday, as rising crude oil prices and concerns about a high U.S. Inflation reading put pressure on policymakers in order to increase interest rates.

Futures rose by 1% to $84.97 per barrel, a new high in early trading. The one-week peak was $85.35. [O/R]

The data shows that China’s factory gate prices have increased 13.5% over the past year to October. That beats forecasts. It also warns against a collapse in global supply chain.

MSCI’s largest index of Asia-Pacific shares, outside Japan, fell 0.2% each in Overnight Wall Street. The Nasdaq saw its first decline in over a dozen sessions. [.N]

In morning trade, the stock fell by 0.2%

U.S. data, due at 1330 GMT, is expected show that consumer prices are rising at 5.8% year on year. Even the dovish Federal Reserve officials Mary Daly & Neel Kazhkari admit it’s running hotter longer than they anticipated.

In a note, NatWest Markets strategists stated that “Coming form them I would imagine that now the (Fed’s) official doubt remains that inflation risks may be much greater than originally assumed.”

The Treasury yield curve flattened on Tuesday as long-dated bonds rallied. This was because investors are betting on future hikes or a slowing of inflation. [US/]

According to NatWest analysts, “a strong (CPI-read) can fuel the flattening.” However, I believe that even a weak CPI reading wouldn’t suffice to ease the markets’ belief that the Fed would hold its ground at this time.

Treasuries fell a little in Asia Hours, lifting the benchmark 10 year yield by 2 basis points to 1.42266%. This was after it touched an overnight low of 1.45150% for six weeks.

But, although currency markets are quiet today, traders chose safe havens to protect their currencies on Tuesday. On that day the yen reached a one-month peak and traders encouraged them to do so.

Tuesday’s Japanese currency was steady at $112.84 per USD. Other risk-sensitive currencies, such as the Australian dollars, were facing pressure. The testing support was at its 50-day moving mean of $0.7374. [FRX/]

Chris Weston from Pepperstone, Melbourne’s head of research said that the dollar would be sensitive to movements in the U.S. Treasury Curve 2-5 years.

To see the breakout of the range of 94.950, we will need to have a 0.8% (monthly U.S. CPI), print,” he stated. It was at 93.997 when it last occurred.

CLOUDS

China’s economic slowdown has also been a problem for investors, especially since a credit crunch is rapidly spreading across the massive property industry.

The sector’s bonds had been hit hard by a sell-off on Tuesday that brought down even investment-grade debts.

J.P. Morgan analysts stated, “The market is driven now more by fear than it is rationale.” “Valuations have accounted for (the worst) case scenario.”

There are other clouds as well. A survey done in Japan shows that manufacturers’ confidence is at a seven-month low. Tesla stock (NASDAQ:) also fell to this level, which could be a sign of investor sentiment.

As traders prepare for Elon Musk’s possible sale, the carmaker that has been the mainstay of equity’s rally from pandemic lows suffered Tuesday’s sharpest drop in share prices in 14 months.

After hitting an all-time high of $68,564 one day before, bitcoin and gold have been the main beneficiaries of the market volatility. Gold rose 3.5% over the past week, to $1.829 an troy ounce, while bitcoin hovered around $67,267.

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