Asian stock markets are gearing up for a mixed opening on Monday, with investors' eyes on a week filled with crucial economic data, including the Federal Reserve's preferred inflation measure.
Following a subdued close on Wall Street, where the S&P 500 slightly dipped by 0.1% and the Nasdaq saw a marginal rise, equity futures in Australia remained unchanged, while Japan's futures experienced a 0.5% drop. U.S. futures showed little movement early Monday.
In bond markets, both Australian and New Zealand bonds saw an uptick, mirroring the rise in Treasuries, which saw the 10-year yield drop to just below 4.2% on Friday.
The dollar maintained its recent surge, with major currencies showing minimal changes after the Bloomberg Dollar Spot Index hit its highest level in over a month, nearing its peak for 2024. This rise in the dollar reflects a shift in investor sentiment towards the world's reserve currency, initially anticipated to weaken as the Fed approached rate cuts. Now, potential rate cuts by other central banks have bolstered the dollar's appeal.
Ed Yardeni, president of Yardeni Research, highlighted in a note that financial crises leading to recessions are less likely now, thanks to the Fed's emergency liquidity measures, such as those deployed during the U.S. banking system stress in March last year.
Investors are keenly awaiting inflation data from around the globe this week. The core personal consumption expenditures index in the U.S., excluding food and energy costs, is expected to show a 0.3% rise, indicating persistent high price increases in February.
Additional inflation data from Australia, France, Italy, and Spain will also be released this week, providing further insight into global price trends as markets anticipate rate cuts.
The bond market sees renewed interest in the bond steepener trade, with investors favoring short-dated U.S. bonds for their short-term price gains as rates decrease.
Key economic indicators and events scheduled for this week include U.S. new home sales, Bank of Japan's policy meeting minutes, appearances by Federal Reserve officials, and inflation reports from various countries. Additionally, oil markets and Bitcoin showed slight changes in early Monday trading.
