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Morning quote: Inflation panic has increased

Giant cranes are seen at the Hanjin Shipping Container Terminal at Incheon New Port in Incheon, South Korea on September 7, 2016. Reuters/Kim Hong-ji acquires licensing rights

Sept 13 (Reuters) – A look at the day ahead in Asian markets from financial markets columnist Jamie McGeever.

A decline in stocks and a new 2023 year high for oil will keep Asian markets on the defensive on Wednesday, as investors await US inflation data later in the day that will greatly help determine the Fed’s rate decision next week. do.

Asia’s economic calendar is marked by unemployment and import and export prices from South Korea, the latest Tankan survey of manufacturing and service sector activity from Japan, as well as Japanese business sentiment and corporate goods prices.

The real fireworks will come after the Asian markets close, with the release of the US CPI for August. Annual core inflation is expected to decline from 4.7% to 4.3%, but headline inflation is expected to increase from 3.2% to 3.6%.

This is a difficult matter for the Fed. And market.

Since the US labor market is still tight by many measures and wage growth is still stagnant, some optimism that inflation will be steadily falling toward 2% may be a little premature.

The latest surge in oil is adding to concerns over price pressures. Brent crude rose nearly 2% on Tuesday to a new high of the year above $92 a barrel, and is up nearly 30% since late June.

Oil prices are now turning positive for the first time this year, without which investors and policy makers cannot do anything. Wall Street stocks closed in the red on Tuesday.

Japan shares and the exchange rate took a breather from some of the unexpected moves on Monday following surprisingly hawkish signals from Bank of Japan Governor Kazuo Ueda over the weekend. The yen weakened below 147.00 per dollar on Tuesday and the Nikkei 225 index jumped nearly 1%.

However, perhaps more tellingly, the 10-year Japanese government bond yield did not retrace any of its moves on Monday, hitting a new 10-year high of 0.72%. The cost of money is rising in the world’s third largest economy.

In China, there was some good news for troubled property developer Country Garden as the firm secured approval from its creditors to extend repayments on six onshore bonds by three years. But the relief now seems to be fading.

After this news, shares of the country’s largest developer jumped by 10%, but ended the day up only 4%. The company’s market cap has almost evaporated over the past few years, and such intraday fluctuations are ultimately meaningless.

China’s real estate sector is the most likely source of a global systemic credit program, according to Bank of America’s September fund manager survey, which also found that investor sentiment on the global economy outside China is improving.

Risks are still tilted to the downside that China’s economy will grow less this year and next than ever before, according to a Reuters survey of economists.

Here are the key developments that could provide greater direction to the market on Wednesday:

– South Korea Unemployment (August)

– Japan Tankan Survey (August)

– Japan Business Sentiment Index (Q3)

By Jamie McGeever; Editing by Josie Cao

Our Standards: The Thomson Reuters Trust Principles.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and freedom from bias under the Trust Principles.

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Jamie McGeever has been a financial journalist since 1998, reporting from Brazil, Spain, New York, London and now again in the US. Focus on economics, central banks, policy makers and global markets – especially FX and fixed income. Follow me on Twitter: @ReutersJamie

Source: www.reuters.com

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