Trump bets cashed ahead of US CPI

By Alden Bentley

(Reuters) – A look at the day ahead in Asian markets.

Investors sobered up from post-election euphoria over Republican Donald Trump’s victory and took some profits ahead of Wednesday’s October US CPI report, which kicks off a calendar close to US news events that markets will see for the rest of the week.

Although the CPI will not be a trading factor for Asia until Thursday, it has implications for global markets, which are already nervous about how Trump’s tough trade policies could affect US growth, inflation, interest rates and thus the Federal Reserve’s easing path.

U.S. stocks fell and bitcoin faltered after flirting with $90,000 on Tuesday, while Treasury yields jumped on reopening from a long weekend as the consequences of tax cuts, trade tariffs and larger budget deficits under the new administration were priced in.

Wall Street’s stumble matched downward moves in Asia in what looks like a negative feedback loop.

Trump’s agenda should be easily pushed through Congress now that Republicans appear to have won a majority of seats in the US House, marking a government sweep.

The S&P 500 and other indexes spent the day in the red. Bitcoin pulled back during the session before making another run, barely reaching the early high of $89,982.

Crypto stocks like Coinbase and Riot Platforms fell, as did Tesla, another stock expected to do well during Trump’s presidency given the close ties between the president-elect and Elon Musk, its billionaire CEO and another outspoken bitcoin promoter .

The 10-year yield posted its biggest basis point increase since June and the yield on the two-year note looked set for its biggest jump in more than a month – excellent support for the dollar. Dollar/yen hit its highest since July 30, trading at 154.73 in late US trade, and China’s yuan was at 7.2423 per dollar after hitting its lowest since August 1.

Chinese stocks fell on worries that Trump’s administration would be filled with China hawks. The Shanghai Composite closed 1.4% lower. MSCI’s global index fell 0.7% after its index of Asian shares ex-Japan ended down 2%, along with the Nikkei’s 0.4% drop.

Data-wise, October US producer prices on Thursday and retail sales on Friday round out the week. Fed Chairman Jerome Powell talks about the economic outlook on Thursday, another reason to keep the powder dry.

Here are key developments that could give more direction to the markets on Wednesday:

– Australia Employment (October)

– US CPI (October)

(Editing by Deepa Babington)