Stocks becalmed before potential CPI storm

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Asian stocks hovered below seven-month highs on Thursday, as investors waited to see whether U.S. data will confirm inflation is in retreat, while the yen rose with a report Japan will next week review the side-effects of its ultra-easy policy.

The hope is that falling inflation reduces the need for interest rate hikes, and markets have priced better-than-even odds that the Federal Reserve slows its cracking pace and hikes by 25 basis points, rather than 50, at next month's meeting.

"We expect a below consensus CPI print, which if it materialises, could push this rally even further."also helped things, remarking to the New York Times that she was leaning towards a 25 basis point hike. Brent crude futures topped $83 on Thursday. U.S. Treasuries added a little to overnight gains, with benchmark 10-year yields down 3.7 bps to 3.5189% and 30-year yields down 4.4 bps to 3.6375%.Along with hopes for gentler central banks in the West, investors are also banking on a recovery in China to help global growth and are eyeing a potential policy shift in Japan.

This likely refers to the fact that 10-year yields have been stuck at the new ceiling of 0.5% for four sessions, even while the BOJ has been busy buying bonds in bulk to get them down.

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Will these data determine an owl or a hawk 🤭

Prediction: decent CPI reading and stocks move way higher. Then a massive correction.

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