Japanese and Australian equities slipped, while Korean shares rose. S&P 500 contracts were little changed on Wednesday following a 0.3% drop for the index in the US. Bond yields rose in the runup to the consumer price index data.
“Animal spirits take a breather” ahead of the consumer price index data, said Jose Torres at Interactive Brokers. “US stocks are stalling near all-time highs as investors await this year’s final CPI report, which is expected to reflect another increase in the annualized headline figure.”
Wednesday’s CPI will offer Fed officials a final look at the pricing environment ahead of their next meeting, which may affect their decisions on the interest-rate path. For now, swap trading projects about an 85% chance of a quarter-point Fed rate reduction this month.
China is set to begin its annual economic work meeting on Wednesday to map out policies for next year, with traders emboldened by the strongest stimulus signals from its top leaders in years. President Xi Jinping said on Tuesday that Beijing is fully confident in achieving its economic growth target this year.
China may raise its budget deficit to the highest in three decades and make the deepest interest-rate cuts since 2015, according to economists. At least seven Chinese brokerages forecast that next year’s fiscal deficit target could reach 4% of gross domestic product, the widest since a major tax reform in 1994. Beijing has historically kept its budget deficit ratio at or below 3%.With little follow through from China’s politburo announcements, “it may be a case of once bitten, twice shy for investors, who are becoming more skeptical and less willing to buy into stimulus, given the lack of follow through with past policy promises,” said Kyle Rodda, a senior market analyst at Capital.com.Treasury 10-year yields were little changed at 4.22%. The Bloomberg Dollar Spot Index was steady after three days of gains.
Meanwhile, the bid by Nippon Steel Corp. to buy United States Steel Corp. looks to be entering its endgame, with President Joe Biden to formally block the $14.1 billion sale on national security grounds once the deal is referred back to him later this month, people familiar with the matter said.
Oil slipped ahead of key US inflation data and a monthly report from OPEC that will provide a snapshot on the market.