Aurelia Butler

(Reuters) – A look at the day ahead in Asian markets. A week is not just a long time in politics. Seven days ago a huge unwind in the yen carry trade and selloff in megacap U.S. tech triggered a wave of volatility that sent global markets reeling and investors running for the safety of U.S. Treasuries.As the new trading week gets underway in Asia on Monday, that seems a long time ago – many assets have recovered much of these losses, volatility has subsided, and traders have heavily scaled back their rate cut expectations.The question now is whether that momentum can be sustained. Some investors will seize upon lower equity volatility to push up risky assets again; others will be wary of potential aftershocks in any corner of the market, especially in mid-August when liquidity is much thinner than usual. Monday’s Asian calendar is light. Indian consumer price inflation is the main event, leaving markets at the mercy of global forces. If that’s the case, Monday should be relatively calm. Wall Street rose on Friday, meaning the Nasdaq and S&P 500 ended last week essentially flat. Treasury yields fell on Friday but registered their biggest weekly rise in months.Stronger-than-expected U.S. economic data suggesting recession fears are overblown, and a couple of poorly-received U.S. debt auctions, pushed yields higher. No bad thing, perhaps, if you think the previous week’s plunge was excessive.Asian markets’ rebound last week was pretty impressive. After the Nikkei registered its second biggest fall on record and its third largest ever rise in the space of 24 hours, the index ended the week down only 2.5%.Other benchmark indices fared even better – the MSCI Asia ex-Japan and MSCI World index both ended flat, and the MSCI Emerging Market index rose 0.2%.In currencies, U.S. futures market data on Friday showed that hedge funds slashed their net short yen position in the week to Aug. 6 by 62,000 contracts. That is the biggest yen-bullish weekly swing since the Fukushima disaster in February 2011, and third biggest since comparable data started in 1986.If this is representative of the broader FX market, the short yen ‘carry trade’ has been mostly wiped out. Do traders begin shorting the yen and putting on carry trades again, or not?Indian inflation is the main data point in Asia and comes after the Reserve Bank of India last week kept its key interest rate unchanged at 6.50%, dismissing the market turbulence and focusing on getting inflation down to its 4% medium term target.The consensus in a Reuters poll is for annual consumer inflation in July to fall to 3.65% from 5.08% in June. That would be the first time in five years below the RBI’s medium-term target.Here are key developments that could provide more direction to Asian markets on Monday:- India interest rate decision- India industrial production (June)- Germany wholesale inflation (July) More

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WASHINGTON (Reuters) – Republican U.S. vice presidential candidate JD (NASDAQ:JD) Vance on Sunday said he supports Donald Trump’s call for presidents to have a say in Federal Reserve Board policy-making, including interest-rate moves, saying those should be “political” decisions.Vance’s remarks during an interview with CNN’s “State of the Union” program came after Trump on Thursday told reporters: “I feel the president should have at least (a) say in there.”Explaining Trump’s position, Vance said that the former president believes the political leadership in the United States should have more say over the country’s monetary policy.While the president nominates members of the Federal Reserve Board, past administrations largely have maintained that White House meddling in the Fed’s monetary decisions would inject short-term political pressures that could end up hurting the U.S. economy over the long-run.That has not stopped presidents in the past, however, from occasionally grumbling about Fed stances. “I agree with him (Trump). That should fundamentally be a political decision. Agree or disagree, we should have America’s elected leaders having input about the most important decisions that confront our country,” Vance said.Vance said that it would be “a huge change” to veer away from a long-held stance that the Fed should be an independent policy-making institution on monetary policy.During last week’s press conference in Florida, Trump boasted: “I think that in my case, I made a lot of money, I was very successful, and I think I have a better instinct than in many cases, people that would be on the Federal Reserve or the chairman.”Trump did not mention that several times over his business career his enterprises have defaulted on interest payments and filed for bankruptcy. Democratic presidential nominee Kamala Harris said on Saturday that she strongly disagreed with Trump’s views on the Fed.”The Fed is an independent entity and as president I would never interfere in the decisions that the Fed makes,” Harris told reporters in Phoenix, Arizona.In March 2022, the Fed began raising interest rates in an effort to tame rising inflation, as the United States was climbing out of the economic shocks of the COVID-19 pandemic.Interest rates set by the central bank can have a direct impact on borrowing costs ranging from home mortgages to credit cards.Wall Street investors have been expecting the Fed to take its first step next month to reverse that course as inflation has been cooling.As of June of this year, the inflation rate was 2.5% by the Fed’s preferred measure, nearing its 2% target, after hitting 7.1% in June 2022. Other measures of inflation have been running higher but are also showing signs of easing. The Trump-Vance remarks come on the heels of a “2025 Presidential Transition Project,” a controversial agenda pushed by some conservatives that recommends vast changes throughout the federal government if Trump wins the Nov. 5 presidential election against Harris.Among its recommendations were: “Appoint a commission to explore the mission of the Federal Reserve, alternatives to the Federal Reserve system, and the nation’s financial regulatory apparatus,” along with other proposals for the Fed.As Democrats have ramped up their attacks on “Project 2025,” Trump has distanced himself from it. More

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At the end of July the Fed kept the policy rate in the same 5.25%-5.50% range it has been for more than a year, but signaled that a rate cut could come as soon as September if inflation continued to cool.”They’ve told people rates probably aren’t going to go up, but if they don’t start taking them down relatively soon, you could dispirit the American consumer,” Moynihan told CBS in an interview.”Once the American consumer really starts going very negative, then it’s hard to get them back.”Moynihan, pressed about Republican candidate Donald Trump’s statement that presidents should have a say over Fed decisions, said people were free to give Federal Reserve Chair Jerome Powell advice and it was then his job to decide what to do.”If you look around the world’s economies and you see where central banks are independent and operate freely, they tend to fare better than the ones that don’t,” he said. More

Hindenburg alleged on Saturday that the head of Securities and Exchange Board of India (SEBI), Madhabi Puri Buch, previously held investments in offshore funds also used by the Adani Group.The regulator said the allegations made by Hindenburg against the Adani group have been duly investigated by SEBI and 23 out of 24 investigation were completed in March 2024. One remaining investigation is close to completion. “As a matter of policy SEBI refrains from commenting on any investigation and ongoing enforcement matter,” SEBI said. Defending its chief, the regulator said Buch made relevant disclosures required in terms of holdings of securities and their transfers and that she has recused herself in matters involving potential conflicts of interest.Buch in a separate statement said that her investment in offshore funds mentioned in the Hindenburg report predates her appointment at SEBI by two years.Indian equity markets have been booming, drawing large funds from domestic institutional and retail investors. The benchmark Nifty index has gained 11.87% in the last six months. A mutual fund lobby body on Sunday called the Hindenburg report as an attempt to create sensation by connecting random events from the past. The Association of Mutual Funds in India asserted that India’s financial system is secure, transparent, designed to foster growth and innovation with high integrity. More