Hotter inflation has materialized and market volatility is rising as the economic restart gathers pace higher-than-expected inflation in the medium term is expected. Investors this week will parse the minutes from the Federal Open Market Committee’s latest meeting for any discussion about accelerating price pressures, and hints of a timeline for reducing asset purchases. Federal Reserve vice Chairman Richard Clarida said during a webinar that the weaker-than-expected April payroll report shows “we have not made substantial further progress” on the central bank’s goals for employment and inflation laid out as thresholds to begin scaling back the central bank’s massive monthly bond purchases.
Asian stocks and U.S. futures rose Tuesday with investors weighing the pace of growth as economies reopen against a pick-up in virus cases in the region. The dollar dipped. Taiwan outperformed, jumping as much as 5.2%, as the financial stabilization fund said it was monitoring stocks after the worst rout in more than a year and data showed foreign investors had continued buying during the selloff. Japan and Hong Kong paced gains in a gauge of the region’s stocks. Earlier, technology and communication services stocks led U.S. stocks lower as volatility ticked up. European futures climbed. Treasuries were stable after retreating.
Oil was up marginally and near a two-year high amid optimism around a demand recovery in regions such as the U.S. Crypto currency Bitcoin fluctuated following a volatile weekend that saw comments from Tesla Inc.’s Elon Musk whipsaw prices. Coinbase Global Inc. fell to a record low and below the reference price used in its April direct listing.
Gold traded near its highest in almost four months. Asian copper miners advanced as they may benefit from tighter regulations and higher taxes that could hit top producer Chile.
Key events to watch out: (1). The Fed publishes minutes from its April meeting Wednesday, which may provide clues to officials’ views on the recovery and how they define “transitory” when it comes to inflation. (2).EIA crude oil inventory report Wednesday. (3). Australia unemployment rate Thursday. (4). Euro-area finance ministers and central bank chiefs hold an informal meeting. A larger group of EU finance ministers and central bank chiefs will meet May 22.