Sumary of Stocks up, dollar squeezed as inflation pulls forward rate hike bets:
- Breadcrumb Trail Links PMN Business Author of the article: Reuters Tom Westbrook Article content SINGAPORE — 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 while Hong 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.
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- Article content Traders responded by bringing forward rate-hike expectations but lowering the projected peak.
- 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.
- “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.