Asia in wary mood for US inflation, earnings tests

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Weak U.S. consumer-price data could lessen the risk of another Fed rate rise.

"Consensus expects a 9% year/year decline in S&P 500 EPS driven by flat sales growth and margin compression," noted analysts at Goldman Sachs.

This week also has major data on U.S. consumer prices which is forecast to show headline inflation slowed to its lowest level since early 2021 at 3.1%, with the core easing to 5.0%. Currently futures imply around a 90% probability of a rise to 5.25-5.5% this month, and a 24% chance of a move in September.

The risk of higher global rates for longer has caused havoc in bond markets, where U.S. 10-year yields jumped 23 basis points last week, German yields 24 basis points and UK yields 26 basis points.The jump in developed world yields caused ripples in currency markets, particularly in carry trades where investors borrow yen at super-low rates to invest in high yielding emerging market currencies.

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