Asia Stocks Climb and Rate Bets Ease. Now Comes Wednesday’s CPI Test

Asian stocks edged higher Monday and the probability of a September US rate hike dropped sharply, giving global markets room to extend last week's record run. The calm has one clear expiry date: Wednesday's inflation report.

Japan's Nikkei and South Korea's KOSPI added marginally as the new week began. The MSCI Asia-Pacific index outside Japan also edged up, all tracking Wall Street's Friday close, where the S&P 500 notched a fresh record high.

The CPI Report That Could Reset the Rate Trade

The shift in rate expectations drove most of last week's action. Futures markets now price around a 44% chance the Federal Reserve raises borrowing costs at its September meeting, down from 67% a week ago. A soft US jobs report triggered the move, pushing Treasury yields lower and lifting risk appetite globally.

Wednesday's consumer price index (CPI) report, covering July prices, is the next checkpoint. Analysts expect a 0.1% rise in headline inflation and 0.2% for core, which strips out food and energy.

… Continue reading the full article at the original source below.