Asian stock markets were in a slump as investor sentiment was in a cautious ‘mood’ following a challenging week with central bank meetings and US inflation data in the spotlight.
The MSCI Asia Pacific broad index of Japanese offshore stocks fell 0.1% while Japan’s Nikkei fell 0.6% after declining 2.6% last week.
The S&P 500 and Nasdaq Composite futures were down 0.2% during early trading.
US 10 -year treasury yields jumped 31 basis points last week but the Wall Street market was seen in good shape despite a strong bond -selling session.
Markets are seen racing to set prices at the risk of a larger rate hike by the Federal Reserve (Fed) with futures expected to rise 50 basis points in 2 meetings in May and June.
According to Bank of America (BofA) economist Ethan Harris, it expects a half -point increase in the next 3 meetings and the cycle peaks at 3.25 to 3.50%.
Clearly, if the inflation rate is below 3% then the current Fed decision is correct while if it exceeds 3% then the Fed needs to be more hawkish in raising until its growth falls to zero.
As a result, the US consumer price report to be released on Tuesday, with a median expectation of a 1.2% rise that will bring annual inflation to 8.5%, is the determinant and attention of many.
In addition, the issue of inflation was also an important topic at the European Central Bank (ECB) meeting on Thursday with the risk of a hawkish tone.
TD Securities analysts said the rise in inflation exceeded ECB expectations and it expects the central bank to announce the swift termination of the Quantitative Easing (QE) program in May.
Meanwhile, the central banks of Canada and New Zealand are also seen to be raising interest rates at their policy meetings this week.
