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By Jamie McGeever, Columnist, Global Finance & Markets

Wednesday, April 5, 2023

A smattering of inflation data, PMIs and an interest rate decision will grab investors’ attention in the Asian session on Wednesday, against an increasingly gloomy backdrop following the latest warning that the U.S. economy is losing steam.

View of an entrance to the Reserve Bank of New Zealand in Wellington, New Zealand November 10, 2022. REUTERS/Lucy Craymer

Annual consumer price inflation in the Philippines and Thailand is expected to slow; purchasing managers index surveys for Japan, Australia and India will be released; and New Zealand’s central bank is expected to slow the pace of rate hikes to 25 basis points.

Global factory activity and global demand are weakening.

Rates markets no longer expect the Fed to raise rates again and are pricing in 75 basis points of easing this year. But falling yields and increased rate cut expectations are not supporting stocks and risk assets – recession fears are growing.

If the Fed does pause tightening campaign, it will be following the Reserve Bank of Australia, which kept its cash rate unchanged at 3.6% to break a run of 10 straight hikes.

Australian policymakers said they want time to assess the impact of past increases as the economy slows and inflation peaks. A similar message could come from the Reserve Bank of New Zealand on Wednesday, although it is still expected to hike by 25 bps.

Investors will scrutinize the accompanying commentary for any hints of an end to its tightening cycle. A slowing U.S. and global economy, and reverberations of last month’s banking shock, could tempt policymakers to ease up sooner rather than later.

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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