Passers-by wearing protective face masks walk past a stock market quotation board in Tokyo, Japan February 24, 2022. REUTERS/Issei Kato

Join now for FREE unlimited access to

  • S&P 500 futures rise slightly, Nikkei futures fall
  • Fed tops central bank meetings
  • Market tilts towards 75bps hikes in BoE and SNB
  • Dollar just off multi-year highs

SYDNEY, Sept 19 (Reuters) – Stock markets slowed in Asia on Monday as investors braced for a week littered with 13 central bank meetings that are sure to see borrowing costs rise across the world and a risk of an increase in size in the United States.

Markets are already fully priced for a 75 basis point hike against the Federal Reserve, with futures showing an 18% chance of a full percentage point.

They also show that 50-50 odds rates could climb as high as 5.0-5.25% as the Fed is forced to tip the economy into recession to get inflation under control. Read more

Join now for FREE unlimited access to

“To what level will the rate of funds ultimately have to rise? said Jan Hatzius, chief economist at Goldman Sachs.

“Our response is high enough to generate a tightening of financial conditions that puts a drag on activity sufficient to maintain a growth path well below potential.”

He expects the Fed to hike 75 basis points on Wednesday, followed by two half-point moves in November and December.

Expectations from Fed members for rates likely to be hawkish will also be important, putting the funds rate at 4-4.25% by the end of this year, and even higher next year.

That risk saw two-year Treasury yields jump 30 basis points last week to the highest since 2007 at 3.92%, making stocks more expensive by comparison and dragging the S&P 500 down by nearly 5% for the week.

Early Monday, the holidays in Japan and the UK got off to a slow start and S&P 500 futures rose 0.1%, while Nasdaq futures were flat.

MSCI’s broadest index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) gained 0.1%, after losing nearly 3% last week.

The Japanese Nikkei (.N225) was closed, but futures implied an index of 27,335 compared to Friday’s close of 27,567.


BofA’s latest survey of fund managers suggests global equity allocations are at an all-time low.

“But with U.S. yields and the jobless rate heading towards 4-5%, bad sentiment isn’t enough to keep the S&P from hitting new lows for the year,” BofA analysts warned. in a note.

“Our suite of 38 proprietary growth indicators paints a bleak outlook for global growth, but we are witnessing one of the most aggressive tightening episodes in history, with 85% of global central banks in tightening mode.”

Most of the banks gathered this week – from Switzerland to South Africa – are expected to rise, with markets split on whether the Bank of England will go 50 or 75 basis points. Read more

“The latest UK retail sales data confirms our view that the economy is already in recession,” said Jonathan Petersen, senior market economist at Capital Economics.

“So although the pound hit a new multi-decade low against the dollar this week, the relative strength of the US economy suggests to us that the pound will remain under pressure.”

The British pound was stuck at $1.1436 after hitting a 37-year low of $1.1351 last week,

The odd one out is the Bank of Japan which has so far shown no sign of abandoning its ultra-loose yield curve policy despite the drastic fall in the yen. Read more

The dollar was stable at 142.78 yen on Monday, having retreated from the recent 24-year high of 144.99 amid increasingly strident warnings of intervention from Japanese policymakers.

The euro was holding at $1.1021, having edged higher from its recent low of $0.9865 on increasingly hawkish comments from the European Central Bank.

Against a basket of currencies, the dollar was flat at 109.60, just off a two-decade high of 110.79 hit earlier this month.

The rise in the dollar and yields was a drag on gold, which was hovering at $1,678 an ounce after hitting lows not seen since April 2020 last week.

Oil prices were trying to rebound on Monday, after losing about 20% so far this quarter amid concerns about demand as global growth slows.

Brent rose 60 cents to $91.95, while U.S. crude rose 55 cents to $85.66 a barrel.

Join now for FREE unlimited access to

Reporting by Wayne Cole; Editing by Sam Holmes

Our standards: The Thomson Reuters Trust Principles.