CRUDE OIL FUTURES: RALLY REMAINS WELL AND SOUND

25 February 2022, 09:21

CME Group’s flash data for crude oil futures markets noted open interest rose for the second session in a row on Thursday, this time by around 30K contracts. Volume followed suit and rose by the most since March 9 2020 by around 1.165M contracts.

WTI keeps targeting $100.50

Prices of the barrel of WTI briefly advanced past the key $100.00 mark on Thursday, although it ended the session with modest gains around $93.00. The uptick was in tandem with increasing open interest and volume, which is supportive of the continuation of the uptrend for the time being.

US SEC. OF STATE BLINKEN DELIVERS REMARKS AT UN SECURITY COUNCIL – LIVE STREAM

17 February 2022, 17:09

US Secretary of State Antony Blinken will be delivering his remarks on the Russia-Ukraine conflict at a UN Security Council Meeting, from UN Headquarters in New York City, on February 17, 2022.

Markets remain risk-averse on Thursday on reports pointing to a heightened risk of a Russian invasion. The benchmark 10-year US Treasury bond yield is down more than 3% on the day and the S&P 500 Index is losing 1.25%.

Meanwhile, the US Dollar Index, which tracks the dollar's performance against a basket of six major currencies, stays relatively quiet below 96.00.

Ukraine's Foreign Minister: Fire from a tank recorded in Eastern Ukraine.

Russia says US security proposals not constructive, ignore key Russia security concerns.

 

EAST UKRAINE: AS OF 1500 LOCAL TIME, 40 ARTILLERY INCIDENTS RECORDED, TWO UKRAINIAN SOLDIERS INJURED

17 February 2022, 17:00

According to the Kyiv Independent, as of 1500 local time, over 40 artillery incidents have been recorded in the Donbas region of Eastern Ukraine and two Ukrainian soldiers have now been injured.

Market Reaction

The latest run of Russia/Ukraine/NATO headlines, which suggest more violence in Eastern Ukraine and worsening tensions, are weighing on sentiment, with the S&P 500 now trading more than 1.0% lower on the day. 

FEARS OF ANOTHER FINANCIAL CRISIS ARE WELL-FOUNDED – NATIXIS

15 February 2022, 15:06

Financial crises occur following a period during which three types of imbalances combine. Macroeconomic imbalances, regulatory imbalances and behavioural imbalances. The three imbalances needed for the next financial crisis to take place are present today, according to analysts at Natixis.

Cause for concern 

“There are again signs today of confluent macroeconomic, regulatory and behavioural imbalances. This is cause for concern, as the simultaneous presence of these three forms of imbalance has led to financial crises in the past.”

“Central banks are increasingly being caught in the same trap: in the wake of a crisis, they do not want to use policies to prevent the occurrence of a financial crisis and prefer to wait for the crisis to break out before responding. This explains the macroeconomic imbalance and some of the regulatory imbalance, as investors rotate into risky assets and risk premia are squeezed.”

 

RUSSIA READY TO OPEN FIRE ON FOREIGN SHIPS THAT ILLEGALLY ENTER TERRITORIAL WATERS – IFAX

14 February 2022, 13:03

The Interfax news agency reported on Monday that a senior Russian military official said Russia was ready to open fire on foreign ships and submarines that illegally enter its territorial waters, per Reuters.

The official further added that any decisions to open fire on foreign vessels would however only be taken at the highest level.

Market reaction

Markets remain risk-averse during the European trading hours following these remarks. As of writing, US stocks futures were down between 0.8% and 1.1%, Germany's DAX 30 was losing 2.8%.

PBOC IS UNLIKELY TO ALTER LPR BUT MAY ROLLING OVER MEDIUM-TERM LOANS – REUTERS POLL

14 February 2022, 08:24

The People’s Bank of China (PBOC) is unlikely to deliver a second consecutive cut to its lending rate, a Reuters poll of 22 financial institutions.

Key findings

“Nineteen out of 22 financial institutions surveyed said they expect the People's Bank of China (PBOC) to issue 200-billion-yuan ($31.45 billion) in maturing medium-term lending facility (MLF) loans on Tuesday, matching the amount maturing on Friday.”

“The remaining three said they expect issuance to slightly exceed the value of loans maturing this week as an indication of the PBOC's easing stance.”

“All survey respondents said they expect the MLF rate to remain stable”.

CRUDE OIL FUTURES: PROBABLE CORRECTION ON THE CARDS

14 February 2022, 08:40

CME Group’s preliminary readings for crude oil futures markets note traders scaled back their open interest positions by around 19.3K contracts at the end of last week. Volume, instead, rose for the third session in a row, this time by around 328.2K contracts, the largest single-day build since November 26 2021.

WTI looks overbought, targets $100/bbl

Friday’s important uptick in prices of the WTI was on the back of shrinking open interest, hinting at the idea that a corrective move could be in the offing in the very near term. This view is supported by the overbought condition of the commodity, as the RSI hovers around the 75.00 level. The rally in crude oil, in the meantime, now shifts the attention to the psychological $100.00 mark per barrel.

THE CALL BETWEEN BIDEN AND PUTIN HAS ENDED, MARKETS ON HIGH ALERT WITH FINGER OVER THE PANIC BUTTON

12 February 2022, 20:12

The possibility of steeper interest rate hikes worried investors, and tensions between Ukraine and Russia escalated on Friday. This was sending markets into a state of flux with the usual risk assets and FX responding in kind; More on that below. 

Meanwhile, there was news that a Russian attack on Ukraine could begin any day now and would likely start with an air assault, a White House national security adviser Jake Sullivan said on Friday. However, while the US says Russia has all the forces in place to launch military action, Russia has repeatedly said it has no such plans.

Ther BBC reports that ''Russia is adamant it has no plans to attack Ukraine: and foreign intelligence chief Sergei Naryshkin has condemned 'dangerous lies' being spread by the US and in Western capitals.''

Ukrainian President Volodymyr Zelensky said warnings of Russian aggression were stoking “panic” after the US national security advisor warned of an imminent Russian invasion.

''Ukraine is less convinced of the risk and its president has appealed to the West not to spread 'panic','' the BBC also wrote. 

On the other hand, President Vladimir Putin has threatened "appropriate retaliatory military-technical measures" if what he calls the West's aggressive approach continues which could jeopardise Europe's entire security structure, in the least, so markets are paying close attention to weekend developmemts. 

Putin told his French counterpart Emmanuel Macron Saturday that accusations Moscow plans to attack Ukraine were "provocative speculation" and could lead to a conflict in the ex-Soviet country.

"Conditions are being created for possible aggressive actions of the Ukrainian security forces in the Donbass," the Kremlin added.

Meanwhile, the US State Department is drawing down most of its staff at the US embassy in Kyiv because Russia has a “very capable” military and the US has to prepare for the worst scenario, according to a senior US official. “Prudence requires us to assume, to plan for and prepare for a worst-case scenario. And the worst-case scenario would obviously involve substantial Russian attacks on the Ukrainian capital,” the official told reporters during a phone call on Saturday morning. 

US Secretary of Defense Lloyd Austin spoke with his Russian counterpart Sergey Shoyguon on Saturday and they discussed Russia's troop buildup in Crimea and around Ukraine, the Pentagon said. US President Joe Biden and Russia's Vladimir Putin also spoke by phone for an hour on Saturday and was completed at 12:06 p.m. ET, according to a White House official. Markets are now waiting for news of what was discussed after US equity benchmarks ended the week lower, with US stocks declining for a second consecutive session on Friday.

The S&P 500 ended lower by 1.9% to 4,418.64 and fell 1.8% for the week. The Nasdaq Composite lost 2.8% to 13,791.15 and declined 2.2% for the week and the Dow Jones Industrial Average pulled back by 1.4% to 34,738.06, ending the week 1% lower.

West Texas Intermediate crude oil surged by 4.5% to $93.93 a barrel and the global benchmark Brent crude was also advancing by 4.1% to $95.15 per barrel. This is a dangerous secenario for global markets considering the onset of uber high inflaiton readings of late and the proposed agressive resolve from global central banks. The blockbuster US Consumer Price Index report had already increased odds for a 50bp hike from the Federal reserve and talks of an emergency interest rate meeting and action before March's Federal Open Marlet Committee convenes to decide on the best course of aciton. However, energy prices would be tactically vulnerable to a deescalation in Russian-Ukrainian tensions.

Meanwehile, gold jumped on to a near two-month peak as concerns over surging inflation and the drums of conflict lifted demand for the safe-haven metal. Spot gold ended 1.77% higher to $1,858.98 per ounce and hit its highest level since Nov 2021. US gold futures settled up 0.3% at $1,842.1. Gold is considered a hedge against soaring inflation and is often used as a safe store of value during times of political and financial uncertainty. However, analysts at TD Securities argued that ''without sustained buying flow, gold prices are likely to succumb to the substantially higher real rates amid a hawkish regime at the Fed.''

Risk-FX on the backfoot

As for forex, the yen has picke dup a bid with the JXY index ending Friday 0.49% higher. The index that measures the strength of the JPY against a basket of other currencies. USD/JPY ended down 0.47% to 115.41 falling from a high of 116.17.

End off AUD bullish run?

AUD/USD was lower by 0.50% as well to 0.7130, with its bullish campaig potentially coming to a swift end at this juncture:

As per prior techncial analysis, the Aussie has price aciton has complied, helped along by teh Russian risk and a turn in US equities/risk-sentiment:

For the the above scenario to play out, the price will need to break below the lows and close below the 61.8% ratio.

The hourly chart could play out as follows: A knee-jerk relief that there have been no conflict escaltionary headlines over the weekend, but the sistemic risks of conflict prevail for the days ahead nontheless:

US NATIONAL SECURITY ADVISOR SULLIVAN: US DOESN'T THINK RUSSIA'S PUTIN HAS MADE FINAL DECISION ON INVASION

11 February 2022, 21:24

US National Security Advisor Jake Sullivan pushed back against the earlier report via PBS that the US believes Russia President Vladimir Putin had decided to order an invasion of Ukraine. He said the report "does not accurately capture" what US intelligence believes, saying that they don't think a final decision has been made yet, though such a decision may come soon. 

US suspends 44 flights by Chinese carriers after Beijing action

The decision will cut some flights by Xiamen, Air China , China Southern Airlines and China Eastern Airlines. — AFP pic

WASHINGTON, Jan 22 — The US government said yesterday it would suspend 44 China-bound flights from the United States by four Chinese carriers in response to the Chinese government’s decision to suspend some US carrier flights over Covid-19 concerns.

The suspensions will begin on January 30 with Xiamen Airlines’ scheduled Los Angeles-to-Xiamen flight and run through March 29, the Transportation Department said.

The decision will cut some flights by Xiamen, Air China , China Southern Airlines and China Eastern Airlines.

Since December 31, Chinese authorities have suspended 20 United Airlines, 10 American Airlines and 14 Delta Air Lines flights, after some passengers tested positive for Covid-19. As recently as Tuesday, the Transportation Department said the Chinese government had announced new US flight cancellations.

Liu Pengyu, a spokesman for the Chinese Embassy in Washington, said Friday the policy for international passenger flights entering China has “been applied equally to Chinese and foreign airlines in a fair, open and transparent way.”

He called the US move “very unreasonable” and added “We urge the US side to stop disrupting and restricting the normal passenger flights” by Chinese airlines.”

Airlines for America, a trade group representing the three US carriers affected by China’s move along with others, said it supported Washington’s action “to ensure the fair treatment of US airlines in the Chinese market.”

The Transportation Department said France and Germany have taken similar action against China’s Covid-19 actions. It said China’s suspension of the 44 flights “are adverse to the public interest and warrant proportionate remedial action.” It added that China’s “unilateral actions against the named US carriers are inconsistent” with a bilateral agreement.

China has also suspended numerous US flights by Chinese carriers after passengers later tested positive.

The department said it was prepared to revisit its action if China revised its “policies to bring about the necessary improved situation for US carriers.” It warned that if China cancels more flights, “we reserve the right to take additional action.”

China has all but shut its borders to travellers, cutting total international flights to just 200 a week, or 2 per cent of pre-pandemic levels, the Civil Aviation Administration of China (CAAC) said in September.

The number of US flights being scrapped has surged since December, as infections caused by the highly contagious Omicron variant of the coronavirus soared to record highs in the United States.

Beijing and Washington have sparred over air services since the start of the pandemic. In August, the US Transportation Department limited four flights from Chinese carriers to 40 per cent passenger capacity for four weeks after Beijing imposed identical limits on four United Airlines flights.

Before the recent cancellations, three US airlines and four Chinese carriers were operating about 20 flights a week between the countries, well below the figure of more than 100 per week before the pandemic. — Reuters

Iran Counts 30 Crypto Mining Farms Licensed to Mint Digital Currencies

Iranian authorities have so far authorized 30 facilities for cryptocurrency mining. The crypto mining farms are spread across several regions, including Tehran Province. The government has put out the data amid a crackdown on illegal miners in the country.

A Third of Authorized Mining Farms Are Based in Two Provinces

The Iranian Ministry of Industries, Mining, and Trade has issued licenses to 30 cryptocurrency mining centers, the Financial Tribune revealed this week, quoting official figures published on the department’s website. One of these mining farms is based in Tehran Province where the nation’s capital is situated.

Semnan Province, the administrative region to the east of Tehran, is home to the largest number of licensed facilities, with six crypto farms. Alborz Province is next with four, followed by Mazandaran, East Azerbaijan, and Zanjan provinces.

The ministry has also issued 2,579 establishment permits for new industrial units across the Islamic Republic, 305 of which are in Zanjan Province. Fars Province, with 262 permits, and West Azerbaijan, with its 247, are ranked second and third respectively, the English language Iranian daily detailed.

Iran approved cryptocurrency mining as a legal activity two years ago. The government introduced a licensing regime for entities that want to get involved in the industry. A report indicated that 14 bitcoin mining farms were operating under such licenses last summer.

Iranian Miners Are Facing Changing Tides

High cryptocurrency prices and low energy costs — authorized miners were initially offered a discount of almost half the regular electricity rate — turned crypto mining into an attractive business in Iran. Things have changed, however, and this year’s power shortages were partially blamed on the energy-intensive coin minting process.

In May, authorities said they’ll pull the plug on licensed crypto miners in peak hours of power consumption. According to government estimates, authorized mining facilities use around 300 megawatts of electricity every day.

Tehran went after illegal miners as well, accusing them of burning more than 2,000 megawatts daily. According to the state-owned power utility, Tavanir, the country’s electricity deficit amounts to 5,000 megawatts. Eventually, Iran decided to ban crypto mining altogether, until Sept. 22.

In a year, Iranian law enforcement has shut down over 180 crypto farms in Tehran Province alone. Earlier in June, authorities confiscated 3,000 units of mining hardware from illegal enterprises. Last week, Iranian police seized 7,000 bitcoin mining machines.

What are your expectations about the future of cryptocurrency mining in Iran? Let us know in the comments section below.

MARKETS IN A MINUTEVisualizing the History of U.S. Inflation Over 100 Years

Macron warns Johnson ‘nothing is negotiable’ over Northern Ireland Protocol

The French president last night ramped up the pressure on Boris Johnson over the Northern Ireland protocol by insisting “nothing is negotiable” as the G7 summit of world leaders risked being overshadowed by the bitter standoff over Brexit.

In a defiant intervention as he prepared to travel to the UK, Emmanuel Macron warned Boris Johnson that France is not open to renegotiating any aspect of the protocol – and even appeared to raise questions about whether the UK could be trusted.

Asked about British demands for aspects of the protocol to be reworked, Macron told journalists at an Elysee press conference: “I think this is not serious – to want to have another look at something in July that was finalised in December after years of discussions and work.”

“We have a protocol,” he continued. “If after six months you say we cannot respect what was negotiated, then that says nothing can be respected. I believe in the weight of a treaty, I believe in taking a serious approach. Nothing is negotiable. Everything is applicable.”

His tough words came as Johnson was forced to play down divisions with US president Joe Biden, calling him “a breath of fresh air”, after it emerged that US diplomats had remonstrated with the UK’s Brexit negotiator, Lord Frost, about the risk of tensions being inflamed in Northern Ireland.

Talks on resolving the impasse over the implementation of the protocol collapsed without agreement earlier this week, and Frost has accused the EU side of “legal purism” in its interpretation of the agreement. He is expected to join the summit on Friday.

Both Downing Street and the White House reaffirmed their commitment to the Good Friday agreement after the talks, and stressed the need for the standoff to be resolved jointly, between the UK and the EU.

But Johnson’s official spokesperson made clear afterwards that didn’t mean the UK was stepping back from the threat of taking unilateral action – such as invoking Article 16 of the agreement, to suspend the protocol. “We continue to keep all options on the table, because time is short,” the spokesperson said.

EU analyst Mujtaba Rahman, of consultancy Eurasia Group, said he now puts a 30% probability on the risk of an EU-UK trade war, in which he said the EU could retaliate by limiting UK fish exports and even interrupting the UK’s electricity supply to Jersey and mainland Great Britain. He said an intervention by the G7 appeared necessary to resolve the situation. “All eyes are on Cornwall, as the relationship hangs on the precipice.”

The prime minister insisted that discussions with Biden had been “very good” – though unusually the pair did not hold a joint press conference, instead giving separate statements on camera.

“There’s no question that under President Biden there is a massive amount that the new US administration wants to do together with the UK, on everything from security, working together, protecting our values around the world together, but also on climate change,” the prime minister said. “So it’s a big breath of fresh air. It’s new, it’s interesting, and we’re working very hard together.

“One thing we all, absolutely want to do, and that is to uphold the Belfast Good Friday agreement, and make sure that we keep the balance of the peace process going. That’s absolutely common ground, and I’m absolutely optimistic that we can do that.”

Biden was similarly effusive about what he called a “very productive meeting”, referring in his post-talks comments to the “special relationship” between the US and UK, a term of which Johnson is reportedly not a fan

Biden said: “We affirmed the special relationship – that is not said lightly – the special relationship between our people and renewed our commitment to defending the enduring democratic values that both our nations share.”

The pair exchanged gifts, with Biden giving Johnson a US-made bike, and the prime minister giving him a picture of the abolitionist Fredrick Douglas, from an Edinburgh mural.

Earlier, Charles Michel, president of the European Council, who will meet Johnson in Cornwall alongside commission president Ursula von der Leyen, said it was “paramount to implement what we have decided” over Northern Ireland.

Johnson and Biden were all smiles as they greeted each other on camera before their talks, the location of which had to be moved to the conference hotel from St Michael’s Mount, just off the Cornish coast, because of poor weather.

When Biden said the pair had both “married above our station”, Johnson replied: “I’m not going to disagree with the president on that or anything else.” He added that it was “fantastic” to see Biden.

While Brexit does not formally feature on the formal agenda, with Johnson telling Atlantic magazine recently: “We’ve sucked that lemon dry,” the US is concerned about Frost’s tactics over the implementation of post-Brexit border checks in Northern Ireland.

Biden’s national security adviser, Jake Sullivan, had hammered home Washington’s message on the way to London on Thursday, telling journalists: “Any steps that imperil or undermine the Good Friday agreement will not be welcomed by the US.”

Labour’s Louise Haigh, the shadow Northern Ireland secretary, said: “It is worrying on the eve of such an important summit that Boris Johnson’s actions are isolating Britain from our strongest allies. The prime minister personally negotiated the protocol, so has a responsibility to make it work, and protect the precious Good Friday agreement.”

Other G7 leaders arrive tomorrow, and Johnson will hold bilateral meetings with his counterparts from Japan, Canada and Italy.

The leaders will hold their first formal summit session in the afternoon, covering the recovery from the Covid pandemic, before meeting the Queen for a reception at the Eden Project.

#brexit #globaleconomy

FTSE 100 finishes lower, miners weigh, GBP soft, Bitcoin rebounds

Key Points

• FTSE 100 closing price of 7,079.30, -0.2%

• Miners, homebuilders weigh on FTSE

• Travel & leisure stocks strong

• GBP soft on reopening fears, EU talks

• Bitcoin rebounds as El Salvador makes it legal tender

The FTSE 100 finished the session lower but off of worst levels as a fall in miners and homebuilders was largely offset by a rally in travel & leisure stocks.

Homebuilders had been strong earlier in the week amid signs of a raging hot housing market with house prices rising by the most since 2014 in May. However, they have pulled back slightly today amid touted profit taking.

At the other end of the scale, travel & leisure stocks were strong as investors appeared cautiously optimistic that some travel plans can go ahead this summer. The European Parliament approved the digital COVID certificate today, aimed to essentially enable travel between member states restriction free. However, despite approval from parliament, the member states will still be able to decide individually how to apply the rules.

Companies such as Restaurant Group (LON:RTN), IAG (LON:ICAG), Wizz Air (LON:WIZZ) and EasyJet (LON:EZJ) were near the top of the FTSE 350. However, SSP Group (LON:SSPG), the owner of brands such as Upper Crust, fell after posting a £300mln loss last year due to the pandemic.

GBP was soft although FX markets were again trading in tight ranges ahead of the key risk events tomorrow including US CPI and the ECB interest rate decision. Discussions between the UK and the EU on the Northern Ireland protocol remain fraught, and the European Union is reportedly considering advancing their legal challenge and potentially introducing tariffs over the UK’s action in Northern Ireland.

GBP/USD dropped back towards 1.4100 and EUR/GBP made a firm break above 0.8600 following the latest rhetoric from the UK and EU.

WTI and Brent crude futures were both trading higher after the latest US inventory data. The EIA said crude stockpiles fell by 5.241mln barrels in the latest week, more than the drawdown of 2.036mln barrels expected. The news helped WTI trade above $70 per barrel, along with reports that issues remain in Iranian nuclear talks. However, if sanctions are lifted, Iran expects most of the country’s crude oil production will be restored within a month.

In the cryptocurrency space, Bitcoin staged a rebound above $35,000 after dropping towards $32,000 yesterday. The main story was news that El Salvador’s parliament had approved the Bitcoin Law, making Bitcoin legal tender in the country. However, it wasn’t all positive. China started blocking cryptocurrency exchanges from social media platforms and there were also reports that the country had ordered all cryptocurrency miners in Qinghai province to shut down.

#bitcoin #digitalcurrency

#cryptocurrency #globaleconomy

Latest News

Dollar down, investors Digest Chinese Inflation Data

The dollar was down on Wednesday morning in Asia with investors awaiting upcoming U.S. inflation data while digesting that released by China earlier in the day.

They also await a European Central Bank (ECB) policy decision to further gauge the economic recovery from COVID-19 and central banks’ potential next steps.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.02% to 90.062 by 11:30 PM ET (3:30 AM GMT).

The USD/JPY pair inched down 0.03% to 109.45. The AUD/USD pair inched down 0.03% to 0.7738 and the NZD/USD pair inched down 0.01% to 0.7197.

The USD/CNY pair inched down 0.07% to 6.3953. China’s consumer price index (CPI) for May, released earlier in the day, contracted 0.2% month-on-month and grew 1.3% year-on-year, both below forecasts. Meanwhile, the producer price index (PPI) grew a better-than-expected 9% year-on-year.

Yuan bulls’ recent enthusiasm was also damped by the passage of a bill in the U.S. Senate aimed at countering the economic as well as strategic challenge from China.

The GBP/USD pair inched up 0.06% to 1.4163. However, concern is growing that the rising case numbers of the COVID-19 Delta variant in the U.K. could mean a delay in the ending of lockdown measures. The measures are currently slated to end on Jun 21.

Investors continued to bet against the greenback but remained concerned about whether central banks would begin to withdraw their unprecedented stimulus measures. Also of interest is whether rising interest rates will end a 15-month dollar downtrend.

Some investors predicted that higher-than-forecast inflation in the U.S. could prompt central banks to begin tapering their asset purchases and give the dollar a boost. However, moves were small ahead of the U.S. data, including the CPI, and the ECO policy decision, both of which are due on Thursday.

"Markets need reassurance that the global economic recovery isn't under threat from either dangerous strains of COVID-19, or from the Fed being forced to change tack (on stimulus) much earlier than expected... so far, the vaccines appear to work and while distribution is uneven... it's still accelerating overall," Societe Generale (OTC:SCGLY) currency strategist Kit Juckes told Reuters.

"That's cause for hope. For markets though, it means that risk assets need regular reassurance that the Fed isn't going to tighten sooner than expected. And so, we wait for Thursday's CPI data, then the following week's U.S. Federal Reserve policy meeting,” he added.

The Bank of Canada will also hand down its policy decision later in the day.

However, other investors focused their attention on inflation.

"U.S. economists are expecting a 0.4% month-on-month rise in both the headline and the core inflation numbers, they're big numbers... I think the risk is they fall short of that,” Commonwealth Bank of Australia (OTC:CMWAY) currency strategist Joe Capurso told Reuters.

This could pull down U.S. yields and bring the dollar with them unless the figure spooked stock markets' enough to drive safe-haven flows into the dollar, he added.

Latest News

 

World stocks near record high, U.S bond yields near 1-month low.

TOKYO (Reuters) - World stock prices held near record highs on Wednesday, while U.S. bond yields flirted with their lowest levels in a month, as investors bet the Federal Reserve is some way off from tapering its economic stimulus.

MSCI's all-country world index last stood at 716.64, after scaling an intraday high of 718.19 on Tuesday, led by gains in European stocks.

In Asia, the MSCI's broadest index of Asia-Pacific shares outside Japan ticked down 0.15% and Japan's Nikkei average shed 0.25%.

On Wall Street on Tuesday, the S&P500 was steady and near its record high as investors looked to Thursday's inflation data.

The 10-year U.S. debt yield, on the other hand, fell to 1.513%, its lowest level in a month, and down a quarter of a percentage point from a 14-month peak of 1.776% hit in March. It last stood at 1.533%, almost flat so far on Wednesday.

"As the recovery in the job market is contained, any discussion at the Fed on tapering is unlikely to gain momentum, even if it starts soon," said Naokazu Koshimizu, senior rates strategist at Nomura Securities.

"So those who had bet on steepening of the yield curve are unwinding their positions while some investors are also now buying to earn carry."

U.S. payrolls data last Friday showed job hiring did not grow as fast as economists had expected, despite growing signs of a labour shortage.

Many analysts think more evidence of strong jobs growth would be required for the Federal Reserve to step up its discussion on tapering.

The U.S. central bank has said rises in inflation this quarter would be transient and would not threaten price stability, one of its key mandates.

Thursday's U.S. consumer price data is expected to show the overall annual inflation rate rose to 4.7% and core inflation increased to 3.4%.

While those readings will be well above the Fed's inflation target of 2%, many economists expect the inflation rate to ease in coming months, allowing the Fed to wait before taking any tapering measures.

Yet some investors remained wary that a tight labour market could lead to unexpectedly strong inflationary pressures.

"The U.S. labour market looks really tight. At the moment, workers are not coming back for various reasons. But they will eventually return and as payrolls grow, companies will have to raise wages," said Yoshinori Shigemi, macro strategist at Fidelity International. 

Major currencies were steady.

The euro stood flat at $1.2173, while the dollar fetched 109.50 yen.

Investors have scaled back expectations that the European Central Bank may indicate a plan to reduce its asset purchases when it reviews policy on Thursday.

Oil prices held firm after U.S. Secretary of State Antony Blinken said that even if the United States were to reach a nuclear deal

with Iran, hundreds of U.S. sanctions on Tehran would remain in place.

U.S. crude futures closed above $70 per barrel for the first time since Oct 2018 on Tuesday and last stood at $70.21, up 0.2%.

Brent futures rose 0.2% to $72.35, staying near their highest level since early 2020.