Asia set to open mixed; bond yields, Aussie dollar gain overnight

Marco Green
July 16, 2017

The dollar index, which tracks the greenback against six major rivals, slid 0.57 percent to 95.187 after earlier falling to 95.181, its lowest since September 2016.

Gold has continued to gain slightly in early trading today. The S&P 500 gained 9.57 points, or 0.39 percent, to 2,457.4 and the Nasdaq Composite added 30.69 points, or 0.49 percent, to 6,305.13. Inflation was flat, while a reading of retail sales slumped, emphasizing persistent weakness in that sector and underlining consumer reluctance to spend freely.

"I think this morning's economic data once again plays into the narrative that the Fed will be more dovish", said Ian Winer, head of the equities division at Wedbush Securities, in an interview.

The annualized rate of inflation in several CPI components over the past three months showed declines of 4.9 percent in apparel, 5.5 percent in used cars and trucks and 4.1 percent in professional services, said Heidi Learner, chief economist in NY for brokerage Savills Studley, a unit of Savills Plc. It appears in the Dow Jones index, S&P 500 and the Nasdaq.

Lackluster economic data out Friday led to a drop in 10-year Treasury yields, meaning investors bought notes. The US 10-year yield is down by 1 basis point at 2.31%.

Bond yields rose overnight.

"Provided the economy evolves broadly as anticipated, it will likely begin to implement the program this year", said Yellen in her testimony referring to the balance sheet reduction.

The comments also supports the fact that the inflation data will be crucial during the few coming months. Major banks, including JPMorgan Chase, Citigroup and Wells Fargo, will report results on Friday.

Quarterly earnings will kick off on Friday with big USA banks including JPMorgan Chase, Wells Fargo and Citigroup reporting results.

The June report was part of an executive order by President Trump.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.2 percent to its highest since May 2015, as Yellen sounded cautious on inflation and noted on Wednesday the Fed would not need to raise rates "all that much further" to reach current low estimates of the neutral funds rate. A stronger British pound was weighing on the FTSE 100 (http://www.marketwatch.com/story/stronger-pound-holds-ftse-100-back-for-2nd-day-2017-07-14) for a second day.

The Kospi advanced 0.32 percent to trade firmly above the 2,410 level, making gains for a second-straight day after closing at a record level in the last session.

Meanwhile, Singapore's economy grew 0.4 percent in the second quarter compared to the previous quarter, below a forecast of 1.1 percent from a Reuters survey.

Other reports by Click Lancashire

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