Dollar advanced against its major G10 peers; Key events coming up this week 

Stocks in Asia advanced with bonds after inflation data in the U.S. added to evidence that global growth is continuing steadily with limited price pressures in the American economy.

Equity indexes climbed from Tokyo to Sydney with a gauge of Asian stocks trading at the highest level since 2007. Friday’s data bolstered the view that U.S. inflation below the Federal Reserve’s target may be structural rather than transitory, prompting traders to slightly reduce the odds of another interest-rate increase in December. Metals rallied on the outlook for global growth.

The dollar advanced against its major G10 peers. Federal Reserve Chair Janet Yellen said on Sunday that her “best guess” is consumer prices will soon accelerate after a period of surprising softness, a forecast echoed by European Central Bank President Mario Draghi and Bank of England Governor Mark Carney. Excluding food and energy, so-called core prices rose 0.5 percent in September, below an estimate of 0.6 percent.

With central-bank officials appearing determined to raise rates in December, regardless of whether price growth is at their 2 percent target, some money managers are raising the specter of the U.S. yield curve eventually inverting, oftentimes a signal of an impending recession.

China’s producer prices jumped more than expected last month and consumer prices also increased in one of the remaining data points ahead of the start of the Party Congress later this week.

The U.S. and South Korean navies on Monday began a joint drill involving around 40 warships, amid signs North Korea is preparing for another provocation such as a missile launch. North Korea’s state-run media agency KCNA on Saturday criticized the joint military exercise, calling it a “reckless act of war maniacs.”

Traders will also be watching political developments in Germany. German Chancellor Angela Merkel heads into talks this week to form a national government weakened after her Christian Democratic Union suffered a defeat in Lower Saxony, Volkswagen AG’s home state.

Here are some key events coming up this week:

• Chinese President Xi Jinping gives the opening speech at the 19th Communist Party Congress in Beijing on Wednesday.
• China releases data for GDP,industrial production and retail sales on Thursday.
• U.S. economic data will include a couple of September housing reports. Beginning construction on new homes and sales of previously owned properties will probably show the negative effects of Hurricanes Harvey and Irma on demand and building.
• Catalan President Carles Puigdemont faces a deadline to clarify to the Spanish government whether he’s actually declared independence for the region.
• Earnings season gets into full swing with major U.S. financial firms including Morgan Stanley, Goldman Sachs Group Inc. and Blackstone Group LP. posting results. Netflix Inc. and General
• Electric Co. are also reporting.
• Bank of England Governor Mark Carney appears before the U.K. Parliament’s Treasury Committee for the first time since June’s election on Tuesday.
• The Philippines financial markets are shut on Monday due to a transport strike.

Here are the main moves in markets:

Stocks

• Japan’s Topix index advanced 0.9 percent as of 2 p.m. Tokyo time and Australia’s S&P/ASX 200 Index rose 0.6 percent. South Korea’s Kospi index was little changed.
• Hong Kong’s Hang Seng Index was 0.9 percent higher, while the Shanghai Composite Index was steady.
• Contracts on the S&P 500 Index added 0.1 percent. The underlying gauge gained 0.2 percent last week.
• The MSCI Asia Pacific Index rose 0.6 percent to touch its highest level since November 2007.
• The MSCI All Country World Index reached a record high.

Currencies

• The Bloomberg Dollar Spot Index was up 0.1 percent. It lost 0.6 percent last week, snapping four weeks of gains. It remains more than 8 percent lower this year.
• The yen was at 111.94 per dollar after climbing 0.4 percent on Friday.
• The euro was slightly weaker at $1.1809.
• The Aussie bought 78.72 U.S. cents.

Bonds

• Australia’s 10-year yield fell four basis points to 2.75 percent.
• U.S.’s 10-year yield rose two basis points to 2.29 percent. It fell five basis points on Friday.

Commodities

• West Texas Intermediate crude climbed 0.8 percent to $51.87 a barrel, extending gains. There is mounting speculation over potential disruptions to output in a region that’s home to Iraq’s oldest producing oil fields. Read more here.
• Gold was little changed at $1,302.11 an ounce.
• Copper in Shanghai rallies to highest since April 2013. London Metal Exchange copper was up 0.9 percent to $6,945 a metric ton, headed for the highest close in more than three years.

Source: Bloomberg – Stocks in Asia Advance After U.S. Inflation Data: Markets Wrap

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