SINGAPORE- Asian shares hovered around 15-month highs on Tuesday and the dollar was firm ahead of highly anticipated US inflation data, while Japanese bonds were squeezed as the central bank pulled back a little on its bond buying program.
US British and European equity futures were broadly steady, with the FTSE and Europe’s STOXX 600 set to open near record levels.
MSCI’s broadest index of Asia-Pacific shares outside Japan hit its highest since early 2023 in morning trade, before settling back to flat. Japan’s Nikkei was edged higher.
Benchmark 10-year Japanese government bond yields rose one basis point to 0.95 percent , the highest yield since November, and five-year Japanese yields hit 0.555 percent , the highest since 2011.
The gap, however, with US yields remains hundreds of basis points and wide enough to keep the frail yen under pressure.
A survey released on Monday by the New York Fed showed Americans see inflation a year from now at 3.3 percent , higher than they did a month earlier, and later on Tuesday US producer price figures will be closely watched.
The main focus this week is on Wednesday’s actual US CPI figures, to see whether some upside surprises in the first quarter were a blip or a worrying trend. Expectations are for core CPI to slow from an annual 3.8 percent in March to 3.6 percent for April.
“If there was a fourth consecutive upside surprise, that would probably influence the path of future short term interest rates,” said Nick Ferres, chief investment officer at Vantage Point Asset Management in Singapore.
“If inflation does not continue the disinflation path, we fear that policy rates have not reached a peak in this cycle,” he said.
Also on Tuesday, Alibaba is expected to report results and Federal Reserve Chair Jerome Powell is due to speak at 1400 GMT.
Uber announced a $1.25 billion deal to take over Delivery Hero’s foodpanda business in Taiwan. Anglo American laid out a strategy update that includes exploring options for its steelmaking coal, nickel and platinum businesses, as it fends off a takeover bid from BHP.
