Yuan Up as Traders Weigh Biden-Xi Summit

Yuan Up as Traders Weigh Biden-Xi Summit

The majority of Asian stocks climbed on Tuesday, and the yuan rose in the wake of the results of the first virtual face-to-face meeting of U.S. Treasury yields declined.

MSCI Inc.’s Asia-Pacific share gauge advanced for the fourth time in a row, and U.S. and European equity futures fluctuated following the fact that both the S&P 500 as well as Nasdaq 100 finished with a flat closing. This week’s Asian growth in equity was fueled by Hong Kong, which was supported by a rise in Macau casinos as well as Japanese shares climbed.

Biden and Xi both spoke about the need to cooperate in order to improve U.S.-China relations, while delaying expectations of big breakthroughs. The yuan was at its highest levels since the end of 2018 in anticipation of lessening tensions.

The dollar weakened and 10 year U.S. Treasury yield was approximately 1.60 percent. The yield on bonds fell across the U.S. on speculation the Federal Reserve may have to accelerate policy tightening in order to combat price pressures. 

Markets continue to analyze the likelihood that policymakers have made a mistake when they treat rising prices as a temporary phenomenon. Former New York Fed chairman William Dudley and former Richmond President Jeffrey Lacker suggested that the Fed should speed up its tapering process. Bank of England Governor Andrew Bailey stated that Bailey is “very uneasy about the inflation situation.”

“We do still see quite an accommodative fiscal and monetary policy continuing throughout 2022,” Sarah Shaw, chief investment officer of boutique investment firm 4D Infrastructure, said in an update. “Of course, should inflation prove to be more permanent or higher than expected, then central bank action is inevitable.”

This week’s focus is the strength of the American consumer and the U.S. retail sales data is expected to show an increase and major industry players like Walmart Inc. and Home Depot Inc. are expected to announce their results for the quarter.

There are also indications that an announcement on Biden’s selection to lead the Federal Reserve is due soon. Both the current Chairman Jerome Powell and Fed Governor Lael Brainard have been questioned for the top position.

Additionally, Elon Musk exercised options and also sold additional Tesla Inc. shares, continuing his run of selling that sank the stock.

Oil climbed as investors wait to find out what happens if Biden’s administration will tap crude reserves. Biden administration will be able to tap the reserves of crude. Gold was up, and Bitcoin dropped to about $61,000.

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