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(Bloomberg) — Bonds rose after a solid $39 billion sale of Treasuries reflected speculation that Wednesday’s inflation figures will help the Federal Reserve cut interest rates this year. Asian stocks are likely to ignore the upbeat U.S. session and turn lower.

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Demand was strong at an auction for 10-year notes, with the bid-to-cover ratio of 2.67 the highest since February 2022 – the month before the tightening cycle began. U.S. 10-year Treasury yields fell six basis points to 4.40%. Australian bonds rose slightly early Wednesday.

“After many, many months of mediocre auctions at best, the U.S. Treasury market is finally smiling,” said Peter Boockvar of the Boock Report. “Does the market smell a weaker consumer price index?”

Contracts signaled early losses for stocks in Japan, Hong Kong and Australia, even after the S&P 500 closed at a new high and major technology companies led gains as Apple Inc. hit a record. Chinese stocks are expected to fall further after the CSI 300 index of mainland shares closed at its lowest in more than six weeks on Tuesday on economic concerns.

In late U.S. trading, Oracle Corp. rose sharply as solid order intake pointed to further momentum in the cloud sector. Meanwhile, the Biden administration is reportedly considering further restrictions on China’s access to artificial intelligence chip technology.

Markets now await the release of inflation data and the Fed decision later on Wednesday. Even as India’s post-election volatility continues, central banks in Japan and Taiwan prepare for their own interest rate decisions, and various Southeast Asian currencies test key support levels, there is no denying the fact that US monetary policy is the most important factor for traders around the world.

A survey conducted by 22V Research found that most investors surveyed are betting that both the consumer price index and the Fed’s decision will be risk-on.

“Sixty-three percent of investors believe the Fed will cut rates first because the landing is soft and inflation is on a Fed-friendly trajectory toward below 3 percent. So there will be a cut because policy doesn’t need to be as restrictive,” said Dennis DeBusschere of 22V.

With the Fed widely expected to keep borrowing costs at a 20-year high on Wednesday, there is less certainty about central bankers’ quarterly interest rate forecasts (also known as the “dot plot”).

“We expect Fed Chair Powell and his team to maintain their position that makes potential rate cuts contingent on the committee seeing further progress in reducing price pressures,” said Anthony Saglimbene of Ameriprise.

Sentiment and positioning indicators point to a possible short-term decline in equity markets, driven by uncertainty about the interest rate outlook, according to HSBC strategists. They recommend buying on dips.

“We expect any weakness in risky assets to be short-lived and superficial, and we believe this is a pretty good tactical (re-)entry point,” the team, which also includes Duncan Toms and Max Kettner, noted.

Bank of America Corp. clients were big net buyers of U.S. stocks for the first time in six weeks, led by retail investors and hedge funds, buying $1.9 billion worth of U.S. shares, with inflows coming into both individual stocks and exchange-traded funds, said BofA strategists led by Jill Carey Hall.

“Despite mixed signals from technical indicators, economic data, inflation and global central banks, markets remain biased higher,” said Chris Senyek of Wolfe Research. “Investors’ can’t lose attitude will remain for the foreseeable future as they expect either the economic outlook to improve and/or the Fed to cut rates.”

Company highlights:

  • General Motors Co. approved a new $6 billion stock buyback plan as improved profitability of its core business and growth in electric vehicles enable the automaker to return money to investors.

  • Boeing Co. delivered 24 commercial jets in May, including 19 from its 737 family, as parts shortages and renewed scrutiny from Chinese regulators complicated the company’s efforts to recover from the crisis that has gripped its most popular aircraft.

  • The benefits of Eli Lilly & Co.’s Alzheimer’s drug outweigh the risks, said advisers to the U.S. Food and Drug Administration. This brings the treatment’s long road to market launch closer to a successful conclusion.

  • Spotify Technology SA will introduce a new, more expensive premium plan for its most loyal users later this year, a person familiar with the plans said. Users would have to pay at least $5 more a month to get better sound and new tools for creating playlists and managing their song libraries, the person said.

Important events this week:

  • China PPI, CPI, Wednesday

  • Germany CPI, Wednesday

  • US CPI, Fed interest rate decision, Wednesday

  • G-7 Summit, 13-15 June

  • Industrial production in the Eurozone, Thursday

  • US Producer Price Index (PPI), initial jobless claims, Thursday

  • Tesla Annual Meeting, Thursday

  • New York Fed President John Williams will moderate a discussion with Treasury Secretary Janet Yellen on Thursday

  • Monetary policy decision of the Bank of Japan, Friday

  • Speech by Chicago Fed President Austan Goolsbee on Friday

  • Consumer sentiment from the University of Michigan, Friday

Some of the key market movements:


  • The S&P 500 rose 0.3% as of 4 p.m. New York time; futures were little changed at 8:22 a.m. Tokyo time.

  • Hang Seng futures fell 0.5 percent

  • S&P/ASX 200 futures fell 0.5%

  • Nikkei 225 futures fell 0.6 percent


  • The Bloomberg Dollar Spot Index remained little changed

  • The Japanese yen remained almost unchanged at 157.15 per dollar.

  • The offshore yuan remained virtually unchanged at 7.2732 per dollar.


  • Bitcoin rose 0.2% to $67,447.2

  • Ether rose 0.5% to $3,506.38

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This story was created with the assistance of Bloomberg Automation.

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