Asia open: Feeding off a diet of calming disinflation

Stephen Innes SPI Asset Management

As the sun rises over Asia, the markets calmly grab the baton from a relatively serene US scene. The current buzz isn't about whether the Fed will trim rates at its spotlight-stealing September 17-18 gathering but how deep they'll dig into the cuts. Market whispers are flirting with a conservative 25 basis point shave, though the door is still ajar for a bold 50 bps chop, with the odds sitting pretty at nearly 40% for the latter, per the eagle eyes at CME FedWatch.

The anticipation cranks up a notch as we approach the Fed’s annual pow-wow in Jackson Hole, slated for August 22-24. Here, Chair Jerome Powell is expected to don his maestro's cap, fine-tuning the Fed's symphony of rate strategies before the main event in September. The economic data parade isn’t taking a breather either. Come Thursday, the spotlight swings to the monthly retail sales and weekly jobless claims—figures set to be scrutinized more intensely in the wake of early August's lacklustre job numbers that sent a shiver of recession fears through the markets.

For now, global stocks are feeding off a diet of calming disinflation and a robust series of rate cuts from central banks across the globe, pulling volatility indices to lounge comfortably low. With inflation taking a back seat and the Fed poised to snip away soon, the backdrop of almost 3% real growth and a hearty 14% annual surge in corporate profits sketches a rosy panorama for US stocks and global equities will most certainly feed off.

Author

Stephen Innes

SPI Asset Management

With more than 25 years of experience, Stephen has a deep-seated knowledge of G10 and Asian currency markets as well as precious metal and oil markets.

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