Kevin Buckland

TOKYO (Reuters – A tech-driven global stocks rally slowed down in Asian trade today as investors became more cautious amid uncertain outlooks for inflation and rates.

The world bond yields have continued to fall from their multi-year peak and the dollar is trading ahead of the U.S. inflation report, which will be closely monitored later today. This report should provide new insight into the U.S. rate rises.

The market continued to be tight, as the big drawdown of U.S. inventories reflected the uptrend. [O/R]

Japan’s blue-chip began the day about 1% higher than it was at its peak before beginning a gradual slide that saw it slip close to zero territory. Later, it rebounded and was 0.33% higher.

Meanwhile, blue-chip Chinese fell 0.52% while Hong Kong’s plummeted 0.31%.

The MSCI Asia-Pacific Index, which is the broadest MSCI index, saw a gain of 0.10%.

Kyle Rodda from IG Australia, a market analyst, stated that “We don’t know how many U.S. rates hikes will be this year”

“Any data surprise will inflame this nervousness and lead to the market choppiness.”

Wall Street was led by Big Tech on Wednesday. The Nasdaq jumped 2.1%, and the closing 1.45%, respectively.

U.S. futures pointed lower though, indicating a 0.28% retreat for the Nasdaq and a 0.23% decline for the S&P.

The overnight fall in long term bond yields was an important factor helping sentiment. On Thursday, it fell back to 1.9285% in Tokyo after a close 2-1/2 year high on Tuesday. The German counterpart fell from its three-year peak. [US/][GOVD/EUR]

Damien McColough of Westpac rates strategy, stated in a client letter that it was a positive session for global bond yields, and European bond yields took a break from their recent seemingly endless rise.

Global bond yields are in a bear phase. Investors will likely demand a premium to invest due to inflation and risk. We remain stronger tactical sellers.

The Fed and ECB were more hawkish last week than usual, which caught the markets by surprise. Yields shot up.

Australia’s benchmark yield of ten years fell to 2.86% from 2.157% the day before. This is a drop that was almost three times as large as its previous peak.

Japan’s benchmark yield remained at 0.215% for six years amid concerns that global hawkishness could lead to Bank of Japan taking action.

Christine Lagarde (ECB President) sent the rate-hike bets soaring last Thursday, not repeating that a rise in interest rates for 2022 is very unlikely. But subsequent comments by bank officials suggested that a major tightening of monetary policies was not required.

Although the Fed will likely raise rates in March, there are no details about when.

The money markets predict a Fed increase of 25% next month and a 1-in-4 chance of an additional 5%.

On Thursday, data is due to reveal that U.S. consumer inflation has accelerated at a rate of more than 7% annually. This level recalls the inflation shocks from the 1970s/80s.

After rebounding from Friday’s 95.136 low, currencies were mostly in a holding mode before that release. The steady was at 95.581. [FRX/]

A euro equals $1.14175; the yen trades at 115.49 dollars.

A combination of lower bond yields and a soft dollar gave gold some sparkle. It last traded at $1,834 per ounce, close to its two-week peak. [GOL/]

U.S. West Texas Intermediate futures increased 15 cents to $89.81 per barrel while futures remained steady at $91.53 per barrel.