Asian stock markets began trading this week cautiously amid expectations of more sanctions imposed on Russia while bond markets continue to be risky for the US economy as short-term yields soar.
MSCI’s broad index of Asia-Pacific stocks outside Japan was down 0.1% while Japan’s Nikkei remained flat.
The S & P500 futures lost 0.2% and the Nasdaq Composite futures were up 0.3%.
News from Germany involving protracted Russia-Ukraine peace talks reported the possibility that the West would agree to impose more sanctions in the coming days.
Meanwhile, inflation data last week showed a sharp rise in Europe further increasing pressure on the European Central Bank (ECB) to curb prices despite sluggish growth.
ANZ analyst notes warn that it is time for the ECB to act and it should have acted sooner to repeal the quantitative easing (QE) program in the wake of rate hikes.
Meanwhile, the March NFP jobs report released on Friday looked good, allowing the Federal Reserve (Fed) to make more rate hikes to curb inflation.
In addition, the employment report released also saw the employment rate increase although not on par with the increase in inflation.
According to the report, U.S. employers added 431,000 jobs in March, slightly from the estimated 490,000 but still showing good job growth.
As for the unemployment rate, it dropped 3.6% to a 2 -year low while the average hourly income increased by 5.6% on a year -on -year basis.
Brian Jacobson, senior investment strategist at Allspring Global Investments Wisconsin, noted with more people returning to the office, higher job income.
He added that if other data and the next Fed meeting remain bright, then it is very likely that the central bank will raise 50 basis points and announce an aggressive list of its balance sheets.
One more thing, investors are seen avoiding short -term treasuries to the point of reversing the yield curve as the market sets prices in the risk of tightening which eventually leads to a recession.
Monday morning saw 2 -year yields rise to a 3 -year high of 2.49% and well over 10 years at 2.410%.
