The MSCI Asia Pacific Index rose 0.5 percent to 137.10 on Friday, halting a six-session run of declines and paring this week’s loss to 2.3 percent.
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The euro edged down slightly to $1.1242, and also slipped 0.2 percent against its Japanese counterpart to 114.98 yen.
Australian shares climbed 1%, and were on track for a weekly decline of 0.9%. New Zealand’s S&P/NZX 50 Index advanced 0.6 per cent. Markets are shut for holidays on Friday in China, Hong Kong, Taiwan and South Korea.
But the chances of such a move were dampened Thursday by the release of figures showing retail sales fell last month and wholesale inflation remained tepid, while industrial production also disappointed.
The gap between five-year note yields and 30-year bonds yields widened to 128 basis points, the steepest since July 1.
As of Friday afternoon, traders predicted only a 15 percent likelihood of a hike after its two-day meeting, according to the CME’s FedWatch website.
Despite all the fear and loathing of a Federal Reserve interest-rate hike, there are market segments and exchange traded funds that welcome higher rates.
After a weaker-than-expected 1.1 per cent annualized pace of expansion in the second quarter, the US economy likely picked up pace and is expected to expand 2.8 per cent in the third quarter.
Wall Street also benefited from a 3.4 per cent jump in Apple shares, after the company said that the first batch of its new iPhone 7 Plus sold out globally. The central bank will conduct a comprehensive review of its stimulus programme after failing to reach its two per cent inflation target. However, another Fed member, Rosengren, also spoke the following day in complete contrast alluding to the markets that low rates may be bringing on more risk than the Federal Reserve would like, comparing it to “irrational exuberance”.
The ECB recently surprised the market by leaving all of its key policy rates and its asset-purchase programme unchanged.
The Nikkei article said that, rather than abandoning its controversial negative interest rate policy, “the BoJ will instead consider taking the minus 0.1 per cent deposit rate further into negative territory”.
“Any Fed rate hike, as small as it possibly could be and whenever that comes, will probably disturb many financial markets in expected as well as unexpected places”, Parisis predicted.
There have been signs that the central bank could stand apart from other policy makers and take action or as other central banks have done this month use verbal intervention to steer markets pushing easing monetary policy announcements for later in the year.
The dollar edged down 0.2 percent to 102.24 yen, moving away from a one-week high of 103.35 yen touched overnight.
At the same time, “purchases of shorter-term bonds could be increased to compensate, as some claim overall buying should be kept at the current level of 80 trillion yen [$1 trillion] or so per year”.
The firm described the recent rise in government bond yields as “a splash of cold water to the face” of investors who were complacent about the “lower for longer” mindset.
Brent crude slid 0.5 per cent to $46.33 a barrel, extending losses for the week to 3.5 per cent.
The dollar was broadly weaker in the Asian session after yesterday’s United States headline retail sales fell 0.3% m/m in August versus an expected 0.1% drop.
Spot gold slid to its lowest since September 1 in the wake of the data at $1,306.38, and was last down 0.5 percent at $1,307.36 an ounce.
In late afternoon-trading, the yield on the benchmark 10-year Treasury note was 1.701%, down slightly from 1.703% Thursday though still up from 1.671% at the end of last week.
Amid growing concerns over the side effects of any doubling down by the BOJ, Etsuko Yamashita, chief economist at Sumitomo Mitsui Banking Corp., said central banks in developed economies are “in a situation where they stop to assess the effects and prospects of the policies” they have carried out since the global financial crisis in 2008.
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Stocks on Wall Street gained after a mixed set of U.S. economic data releases were perceived to reduce the chances of the Federal Reserve announcing an interest rate increase next week.
