GLOBAL MARKETS-Stocks up, dollar squeezed as inflation pulls forward rate hike bets

global markets stocks up dollar squeezed as inflation pulls forward rate hike bets

Sumary of GLOBAL MARKETS-Stocks up, dollar squeezed as inflation pulls forward rate hike bets:

  • By Tom Westbrook4 Min ReadSINGAPORE (Reuters) – Asian stock markets rose, the dollar eased and longer-dated bonds rallied on Thursday as investors reckoned on inflation bringing forward rate hikes around the world.
  • The Shanghai Composite was marginally softer whileHong Kong markets were closed for a holiday.
  • Overnight figures showed another solid increase in U.S. consumer prices, while minutes from last month’s Federal Reserve meeting showed policymakers’ growing concern about inflation and a general agreement to start tapering asset purchases soon.
  • In the bond market short-term Treasury yields rose while long-term yields fell, flattening the curve.
  • Longer-term yields also fell in Asia on Thursday and the dollar, which rallied through September, pulled back sharply with the decline in longer Treasury yields and took a breather on Thursday.
  • [FRX/]“The market continued to pull forward the pricing of the first rate hike while also decreasing terminal rate pricing, which we believe is a reflection of the market pricing in a policy mistake,” said analysts at TD Securities.
  • N]Wednesday’s data showed U.S. consumer prices up 5.4% on a year-on-year basis last month and that increases in rent seemed to be picking up steam – which along with soaring energy costs raises the risk of persistent price pressure.
  • In a change from readouts of Fed meetings over the summer, policymakers were also no longer described as “generally” expecting inflation pressures to ease.

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