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Fed's Inflation Gauge: Market Seeks Clues on Rate Path
6 Dec
Summary
- US inflation data due Friday may clarify Federal Reserve's interest rate decisions.
- US stock futures and European markets showed modest gains.
- Japanese government bond yields reached an 18-year high.
Market participants are closely monitoring the upcoming release of the U.S. personal consumption expenditures price index, the Federal Reserve's primary inflation indicator. This crucial data, delayed from September, is anticipated to offer much-needed clarity on the Fed's potential interest rate adjustments, especially given recent conflicting economic signals and ongoing assessments of the labor market's strength. The Fed is widely expected to implement a 25 basis point rate cut next week.
Ahead of this key report, U.S. stock futures indicated a positive opening, following a mixed performance in the previous session. International stock markets also saw a general upward trend, with Europe's Stoxx 600 and the UK's FTSE 100 both climbing. However, U.S. Treasury yields experienced a slight decrease, reversing some of the previous day's gains, even as Japanese yields continued their ascent to multiyear highs.
In Asia, stock markets largely advanced, with Hong Kong's Hang Seng and China's Shanghai Composite recording gains. Notably, Chinese AI chip firm Moore Threads saw a significant surge on its Shanghai debut. Conversely, Japan's Nikkei declined, impacted by cybersecurity firm Trend Micro. The Japanese 10-year government bond yield hit an 18-year peak, fueled by expectations of a Bank of Japan rate increase and persistent inflation, while household spending data showed a year-over-year fall.
