Sujata Ro shows us a glimpse at what lies ahead for the markets today

This is a highly eventful day for markets. U.S. 10-year yields rose above 3% this week, lifting the dollar up to its two-week highest. The yen plunged to 20-year lows and Australia increased interest rates by half point. After a failed confidence vote, the pound plummeted.

Expectations are that U.S. and European equity markets will be under severe pressure.

There are many positives if you look beneath the surface.

This yield increase is not due to an inflation fear rebound, but rather in anticipation of new Treasury bonds worth $96 billion hitting the markets this week.

Most importantly, China is reopening trade, and Beijing follows Shanghai’s lead in relaxed COVID curbs.

The Shenzen bluechips have risen to seven week highs while U.S. listed Chinese shares are on track for fourth-week gains. This is due in part to thawing US trade relations.

JPMorgan (NYSE) (bullish about Chinese stocks) estimates that lockdowns are now affecting areas responsible for 10% of Chinese GDP, up from 40% in April.

Japan was nearby and the fall of the yen provoked Suzuki’s verbal intervention. His weakness was being closely monitored by “a sense of urgent” he stated. This message was diluted instantly when Haruhikokuroda, Bank of Japan governor, reiterated his belief that an extremely easy monetary policy would not be stopped.

Kuroda however, is rapidly becoming an anomaly. Investors were misled by the Reserve Bank of Australia’s rate rise of 50 basis points, which was its largest move in over 22 years. Now rates are at 0.85% and will rise to 2.5% — which is the rate Governor Philip Lowe had previously declared as Australia’s neutral rates — this means that a hectic tightening cycle lies ahead.

Finally, UK PM Johnson will be staying in Downing Street, after he passed Monday’s election. As attention turns to the economic crisis, the pound has fallen 0.7%. Investors may reconsider how long the Bank of England is allowed to raise interest rates.

There are key developments which should give more direction to the markets Tuesday

Japan’s household spending is falling faster than predicted

Everywhere -Final PMIs

-Euro zone Sentix index

Chile to raise interest rates by 75 basis points to 9.9%

Meets the -Central Bank of Argentina

-U.S. trade balance

-U.S. 3-year note auction