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Economy

Short-term yields leap with inflation, China tech drops

By Tom Westbrook

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Short-term yields leap with inflation, China tech drops
© Reuters. FILE PHOTO: A man wearing a protective face mask following an outbreak of the coronavirus disease (COVID-19) walks past a screen displaying the world’s markets indices outside a brokerage in Tokyo, Japan, March 17, 2020. REUTERS/Issei Kato

By Tom Westbrook

SINGAPORE (Reuters) – Asian stocks slipped on Wednesday with new regulatory worries sparking the steepest sell-off in seven weeks for Chinese tech shares, while short-term Treasury yields spiked as investors wagered on inflation pulling forward interest rate rises.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.8% led by a 3.5% decline on the tech index after China’s internet watchdog said it plans stricter registration rules for younger net users. ()

fell 0.6%. U.S. stock markets are at record highs but futures were listless amid creeping worries about central bankers’ responses to inflation. futures were flat and European futures fell 0.3%.

The latest evidence of worldwide pressure on consumer prices came from Australia, where data showed core inflation hit a six-year high last quarter.

The dollar rose and bonds dived to reflect bets the central bank cannot hold rates at record lows. [AUD/]

Two-year U.S. Treasury yields surged to a 19-month high of 0.5010% ahead of next week’s Federal Reserve meeting. [US/]

“There are a couple of things that are of concern to investors, and inflation news is everywhere,” said Khoon Goh, head of Asia research at ANZ Bank in Singapore.

“This is where expectations of when the Fed might start to lift interest rates is starting to come in to focus. The announcement of tapering next week is pretty much a done deal – markets have moved past tapering and are focused on tightening.”

The Fed has all but confirmed it will soon start to whittle back its asset purchases, though has said that shouldn’t signal rate hikes are imminent. Nevertheless, Fed funds futures are priced for a lift-off in the second half of next year.

“We updated our Fed call to show a hike in Q4 2022 and four hikes in 2023,” analysts at NatWest said in a note.

“The inflation overshoot has been persistent,” they said. “There is (only) so much the Fed can tolerate before reacting … it feels inevitable that that conversation will be brought up more and more as we go into next year.”

EARNINGS SUPPORT

In China, besides a further tightening of rules over online access for the young, energy stocks suffered with new measures to curb zooming coal prices which also dropped 10% and have fallen 40% from record peaks.

That seemed to cap gains in the Australian dollar, which settled around 0.3% higher at $0.7526. Three year Australian government bond futures plunged about 19 basis points to their lowest since mid-2019.

Broader currency markets were quiet as traders look to central bank meetings over the next week or so for guidance, with Canada first up at 1400 GMT. The Canadian dollar hovered just below last week’s four month high. [FRX/]

The European Central Bank meets on Thursday, when Bank of Japan also concludes its two-day meeting. No changes are expected from Tokyo, but traders are expecting the ECB to push back on market inflation forecasts and are looking for hawkish clues from the Bank of Canada as prices put pressure on rates.

Earnings reports from Ford, Coca-Cola (NYSE:), McDonald’s (NYSE:) and Boeing (NYSE:) are due later in the day. Solid results have helped Wall Street to fresh records this week, though on Tuesday Facebook (NASDAQ:) shares fell after the company warned of a hit from changes to Apple (NASDAQ:)’s privacy rules.

“Earnings are enough to hold the big three indexes at record highs, but not enough to reinvigorate the rally onto new highs,” said Jeffrey Halley, senior analyst at broker OANDA.

Oil prices eased from overnight peaks, with futures down 0.5% at $85.92 a barrel and down 0.7% to $84.05 a barrel. [O/R]

Gold was steady at $1,788 an ounce and bitcoin held above $60,000 after a late-session drop on Tuesday. [GOL/]

Economy

Mexican Workers Abroad Keep Sending Record Cash Back Home

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Mexican Workers Abroad Keep Sending Record Cash Back Home
Mexican Workers Abroad Keep Sending Record Cash Back Home

(Bloomberg) — Mexico’s remittances reached another record in October, powered by the U.S. economic recovery and a weaker peso that encourages workers abroad to send money back home to support their families. 

Latin America’s second-largest economy posted $4.82 billion in money sent by Mexicans abroad in October, the biggest inflow on record and a 34% gain compared to a year ago, the central bank said on its website Wednesday. The result topped all analyst estimates in a Bloomberg survey, which had $4.58 billion as the average forecast. 

The number of individual transactions grew to over 12.5 million, up from 11.6 million in September, according to the central bank.

Alberto Ramos, an economist at Goldman Sachs Group Inc (NYSE:)., wrote in a note that generous wages in the U.S. combined with a contraction of economic activity in Mexico and a competitive exchange rate led to the record amount.

“Solid workers’ remittance flows have been adding support to the current account and to private consumption, particularly for low-income families, who have a high propensity to consume and are the overwhelming recipients of such transfers,” he wrote. “The moderating activity and income growth profile in the U.S. should lead to a moderation in remittance flows to Mexico in coming quarters.”

Mexico’s President Andres Manuel Lopez Obrador has for months lauded the contribution of workers abroad, stating earlier this month that Mexico was on track to reach a total of $50 billion in remittances by the year’s end. Remittances to Mexico surpassed $42 billion so far in the first ten months of the year.

©2021 Bloomberg L.P.

 

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Economy

U.S. CFPB says considering guidance aimed at curbing banks’ reliance on overdraft, non-sufficient fees revenue

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U.S. CFPB says considering guidance aimed at curbing banks' reliance on overdraft, non-sufficient fees revenue
© Reuters. FILE PHOTO: The seal of the Consumer Financial Protection Bureau (CFPB) is seen at their headquarters in Washington, U.S., May 14, 2021. REUTERS/Andrew Kelly/File Photo

WASHINGTON (Reuters) – The head of the U.S. Consumer Financial Protection Bureau (CFPB) told reporters on Wednesday that he has asked staff to consider additional agency guidance aimed at curbing banks’ reliance on overdraft, non-sufficient fees.

“The [consumer watchdog] is considering a range of regulatory interventions to help restore meaningful competition in this part of the checking market, rather than allowing large institutions to rely on overdraft and non-sufficient revenue fees forever.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Economy

Schumer sees “good progress” in talks to avoid U.S. gov’t shutdown

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Schumer sees
© Reuters. FILE PHOTO: U.S. Senate Majority Leader Chuck Schumer (D-NY) speaks to reporters following the Senate Democrats weekly policy lunch at the U.S. Capitol in Washington, U.S., November 30, 2021. REUTERS/Elizabeth Frantz

WASHINGTON (Reuters) – U.S. Senate Majority Leader Chuck Schumer said on Wednesday that talks with his Republican counterpart Mitch McConnell to avoid a government shutdown were making “good progress,” adding that the two leaders must prevent a group of Senate Republicans from causing “total chaos” by delaying action.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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