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A look at the day ahead in Asian and global markets

By Jamie McGeever, Columnist, Global Finance & Markets

A heavy dose of Japanese corporate earnings and a smattering of South Korean economic data give Asian markets a local steer on Wednesday against a backdrop of growing unease surrounding the U.S. debt ceiling crisis.

Full-year Japanese earnings on tap Wednesday include Softbank <9434.T>, Toyota <7203.T> and Panasonic <6752.T>. They follow bumper numbers on Tuesday from some of the country’s biggest trading houses, some of which billionaire investor Warren Buffett has gravitated to recently.

Japan’s Nikkei 225 index has been on a roll lately, last week hitting a 16-month high. It rose 1% on Tuesday and only four of the last 20 trading sessions have been down days.

A man walks past an electric monitor displaying Nikkei share average and the Japanese yen exchange rate against the U.S. dollar outside a brokerage in Tokyo, Japan May 2, 2023. REUTERS/Issei Kato

South Korean unemployment figures for April and current account data for March are the main economic numbers out on Wednesday, while Japan’s FX reserves for April will be released too.

But global markets are getting nervy, inching closer to the X-Date when the U.S. government runs out of cash as stalemate between Republicans and Democrats in Washington deepens the $31.4 trillion debt ceiling crisis.

Treasury Secretary Janet Yellen has repeatedly warned that the X-Date could be June 1, meaning there is barely three weeks between now and a potential U.S. default.

Investors are beginning to wake up to the possibility. One-month U.S. T-bills are yielding 5.50%, the highest in decades and reflecting a premium of around 25 basis points over three-month bills and the upper limit of the fed funds target range.

Graphics are produced by Reuters.

Famed bond investor Bill Gross said 1-month bills are a screaming ‘buy’ at current levels because history shows a deal will be done, even if it is at the last minute. But what if it is different this time?

Broader markets are feeling the heat. Wall Street and world stocks closed lower on Tuesday, Asian stocks ex-Japan had their biggest fall in two weeks, while gold and the Japanese yen rose.

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.

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