Asian stocks gave up much of their gains as traders weigh the potential for US inflation data due Wednesday to spur volatility across global markets.
A gauge of Asia Pacific equities and US futures were flat, a sign that investors were holding back on taking new positions before the release of a data point seen as crucial for the next Federal Reserve policy decision.
Treasury two-year yields remained above 4%, while the dollar held Tuesday’s loss. US headline inflation is expected to slow, with the core reading forecast to ease both on a monthly and yearly basis.
Expect the S&P 500 index to drop at least 2% should the year-over-year inflation rate come in above the previous reading of 6%, Goldman Sachs Group Inc. partner John Flood wrote.
Few investors have conviction on what to expect from the actual inflation report, according to Tom Lee, head of research at Fundstrat. “In other words, most are ‘flat’ going into a report with an uncertain outcome,” he wrote in a note.
Fed officials offered differing comments on Tuesday about further policy increases, with Chicago Fed President Austan Goolsbee arguing that the central bank should exercise “prudence and patience.” –Bloomberg
