View in Browser

Sign up for Reuters newsletters

A look at the day ahead in European and global markets

By Wayne Cole, Chief Correspondent, Treasury

Data refreshes every time you open this email. For more European market news, click here. Please send any feedback to morningbid@thomsonreuters.com” style=”text-decoration: underline; color: #404040;” rel=”noopener”>morningbid@thomsonreuters.com.

It’s been a slow start in Asia, with little in the way of market-moving news over the weekend. Shares are narrowly mixed, with Nasdaq futures faring best, while the dollar is a shade firmer and Treasury yields are up slightly.

A roundup of comments from board members at the last Bank of Japan meeting suggests they saw raising the cap on bond yields as a way of extending the life of super-easy stimulus, rather than a step towards ending it anytime soon.

Yields on 10-year Japanese government bonds have shifted up to 0.62%, from the previous cap of 0.5%, but the BOJ has stepped in to buy the paper and stop a rush toward the new 1.0% ceiling.

Produce is seen at El Progreso Market in the Mount Pleasant neighborhood of Washington, D.C., U.S., August 19, 2022. REUTERS/Sarah Silbiger/File Photo

Treasury yields were creeping higher again as the market builds a concession ahead of next week’s bumper $103 billion refunding.

Both Bank of America and JPMorgan last week ditched their forecasts for a U.S. recession and embraced the soft landing theme. Yet the softer the landing the more it sits at odds with the market’s aggressive pricing of more than 120 basis points of Fed easing next year, which could be one reason the yield curve has steepened recently.

Inflation figures from the United States and China will be major tests for investors this week. The downside surprise on U.S. CPI last month was a huge boost to markets, so the risk is that anything that is just in line with forecasts would disappoint.

China is expected to report outright disinflation, with analysts looking for an annual CPI drop of around 0.5% and producer prices down about 4%. That would promise to keep downward pressure on prices in the developed world, but also underline the need for more meaningful stimulus in China – which Beijing seems reluctant to deliver this time.

Interestingly, Nasdaq futures are up almost 0.6%, which is a solid gain for this time zone and could reflect die-hard bulls buying the dip in tech shares.

Earnings season is almost over and so far 79% of the S&P 500 has topped forecasts, though that likely in part reflects the Street marking down their forecasts beforehand so as to flatter the outcome for stocks.

This week is news and entertainment time with Walt Disney, New Corp and Fox all expected to report tough conditions. Disney, in particular, has had a string of disappointing film releases and its theme parks seem to be struggling, too.

Asia’s corporate earnings season picks up, with Alibaba the stand out from China, and Sony and SoftBank among a flood of big names from Japan.

Graphics are produced by Reuters.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

Sponsors are not involved in the creation of newsletters or other Reuters news content.

Morning Bid is sent every morning. Think your friend or colleague should know about us? Forward this newsletter to them. They can also sign up here.

Want to stop receiving this newsletter? Unsubscribe here.
To manage which newsletters you’re signed up for, click here.

Reuters Terms & Conditions and Privacy Statement