Traders Bet On Future Chinese Monetary Easing – Asia Market Wrap

Asian equities declined as investors awaited the release of the Federal Reserve’s preferred inflation gauge for fresh clues about its policy outlook.

A gauge of regional shares is set to decline for a sixth straight session, the longest losing run since April. Stocks fell in Australia and South Korea, and Japanese equities pared gains as the yen reversed losses. China’s short-term bond yields slumped further to reach the psychological milestone of 1% for the first time since the global financial crisis, as traders ramped up bets on monetary easing.

Market attention is now on the US personal consumption expenditures data for November, due later Friday. This last major piece of data for the year follows the Fed’s latest hawkish policy pivot, and is weighing on US stock index futures in Asian trading.

In Asia, the yen erased losses after Japan’s key inflation gauge strengthened for the first time in three months and Finance Minister Kato warned against currency speculation. Korea’s Won weakened to levels that can force the National Pension Service to sell up to almost $50 billion of foreign exchange to hedge against losses, according to people familiar with the matter.