Asian Shares Rise, Treasuries Steady Before Warsh: Markets Wrap

(Bloomberg) — Asian shares posted a modest gain, while US stock futures slipped, as traders held back ahead of Federal Reserve Chair Kevin Warsh’s Jackson Hole speech for clues on the path of interest rates. Treasuries held their losses.

MSCI’s Asia Pacific equities gauge added 0.3%, with winners and losers almost evenly split. Futures for Wall Street gauges edged lower as initial enthusiasm about the artificial intelligence trade following Nvidia Corp.’s bullish outlook waned. Contracts for the Nasdaq 100 Index slipped 0.1%, with sentiment weighed down by Marvell Technology Inc., which fell more than 7% in extended trading following its earnings report.

Treasuries held Thursday’s losses, when yields rose two to three basis points across the curve amid concerns about inflation and the US fiscal outlook. Warsh is due to speak at the Fed’s annual gathering in Jackson Hole, Wyoming, with some expecting a hawkish tone. The yield on the rate-sensitive two-year note held at 4.22%. The dollar edged lower.

The modest moves across assets showed traders were reluctant to add to positions before Warsh’s speech, which may determine whether the recent rise in bond yields has further to run. Investors will look for clues on how the Fed will balance persistent inflation against a cooling economy, with any lack of clarity likely to fuel volatility in longer-dated Treasuries and stocks already grappling with concerns over massive AI spending.

“If he does not give any framework guidance, the risk is that it will involve a much higher move in long rates,” Torsten Slok, chief economist at Apollo Global Management, said in an interview with Bloomberg Television.

Traders also assessed fresh clues on the Fed’s policy path, including a drop in US jobless claims and rising wholesale inventories, while the merchandise trade deficit widened in July to the largest since early last year.

Kansas City Fed President Jeff Schmid said monetary policy isn’t restraining the economy. Fed policymakers left the federal funds rate unchanged at 3.5% to 3.75% at their latest meeting, while futures are pricing in a quarter-point increase by year-end.

“Warsh’s speech at Jackson Hole is an opportunity to contain the continued sell-off in long-end Treasuries,” wrote Dhiraj Narula, US rates strategist at HSBC. “Clarity on the Fed’s inflation reaction function could help compress the uncertainty-related term premium.”

A clear policy signal will likely be scarce given Warsh’s reluctance to provide forward guidance, said Elias Haddad at Brown Brothers Harriman & Co. Instead, Warsh may preview the Fed’s five task forces’ early findings on communications, the balance sheet, economic data, productivity and jobs, and the inflation framework, he said.

In Asia, the yen hovered around 159.40 per dollar after Tokyo’s key inflation gauge accelerated for a third month. Data is due Friday from the Finance Ministry on how much the nation spent on currency intervention over the past month.

In other corners of the market, gold edged lower to trade around $4,580 an ounce, while Bitcoin rose 0.7% to about $80,700.

Brent fell 0.5% to about $89.20 a barrel even as diplomatic efforts toward an agreement over the Strait of Hormuz hit fresh hurdles. Separately, Venezuela was closely examining plans to leave OPEC, according to people familiar with the matter.

On Thursday, US technology stocks rallied on Nvidia’s outlook, lifting the major indexes even as every other sector in the US market declined.

While questions over the sustainability of AI spending may continue to fuel bouts of volatility in tech, accelerating investment in the sector may also add to inflation and upward pressure on bond yields.

“The tailwinds from Nvidia’s results may thus quickly fizzle over the course of the trading day as investors prepare for the impact from the speech by Fed Chair Warsh,” said Frederic Neumann, chief Asia economist at HSBC.

Corporate Highlights:

Nvidia Corp. is nearing an agreement to acquire Hugging Face in a deal that would value the AI startup at roughly $13 billion, according to news reports. Mizuho Bank Ltd. has initiated legal action against Radiant World in Singapore’s Supreme Court, according to the court system’s website. A consortium of buyout firm Advent and payment processor Stripe has decided to abandon its pursuit of fintech pioneer PayPal Holdings Inc., according to people familiar with the matter. Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 10:55 a.m. Tokyo time Japan’s Topix rose 0.8% Australia’s S&P/ASX 200 rose 0.3% Hong Kong’s Hang Seng fell 0.2% The Shanghai Composite rose 0.2% Euro Stoxx 50 futures rose 0.3% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1652 The Japanese yen was little changed at 159.43 per dollar The offshore yuan was little changed at 6.7206 per dollar Cryptocurrencies

Bitcoin rose 0.7% to $80,639.29 Ether rose 0.3% to $2,516.23 Bonds

The yield on 10-year Treasuries was little changed at 4.67% Japan’s 10-year yield advanced three basis points to 2.920% Australia’s 10-year yield advanced one basis point to 5.10% Commodities

West Texas Intermediate crude fell 0.5% to $83.09 a barrel Spot gold fell 0.5% to $4,578.37 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Ruth Carson and Aya Wagatsuma.

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