Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Marketmind: Looming U.S. 'X-Date' frays global nerves

Published 05/09/2023, 05:53 PM
Updated 05/09/2023, 08:31 PM
© Reuters. FILE PHOTO: The U.S. Capitol building is seen at night before U.S. President Joe Biden addresses a joint session of Congress during the State of the Union address, in Washington, U.S., February 6, 2023. REUTERS/Evelyn Hockstein

© Reuters. FILE PHOTO: The U.S. Capitol building is seen at night before U.S. President Joe Biden addresses a joint session of Congress during the State of the Union address, in Washington, U.S., February 6, 2023. REUTERS/Evelyn Hockstein

By Jamie McGeever

(Reuters) - A look at the day ahead in Asian markets from Jamie McGeever.

A heavy dose of Japanese corporate earnings and a smattering of South Korean economic data give Asian markets a local steer on Wednesday against a backdrop of growing unease surrounding the U.S. debt ceiling crisis.

Full-year Japanese earnings on tap Wednesday include Softbank (OTC:SFTBY), Toyota and Panasonic (OTC:PCRFY). They follow bumper numbers on Tuesday from some of the country's biggest trading houses, some of which billionaire investor Warren Buffett has gravitated to recently.

Japan's Nikkei 225 index has been on a roll lately, last week hitting a 16-month high. It rose 1% on Tuesday and only four of the last 20 trading sessions have been down days.

(Graphic: Japanese yen and stocks - https://fingfx.thomsonreuters.com/gfx/mkt/akveqywjyvr/JapanYenStocks.jpg)

South Korean unemployment figures for April and current account data for March are the main economic numbers out on Wednesday, while Japan's FX reserves for April will be released too.

But global markets are getting nervy, inching closer to the X-Date when the U.S. government runs out of cash as stalemate between Republicans and Democrats in Washington deepens the $31.4 trillion debt ceiling crisis.

Treasury Secretary Janet Yellen has repeatedly warned that the X-Date could be June 1, meaning there is barely three weeks between now and a potential U.S. default.

Investors are beginning to wake up to the possibility. One-month U.S. T-bills are yielding 5.50%, the highest in decades and reflecting a premium of around 25 basis points over three-month bills and the upper limit of the fed funds target range.

(Graphic: US 1-month/3-month bill spread - https://fingfx.thomsonreuters.com/gfx/mkt/zgpoblxyyvd/BILLSPREAD.png)

Famed bond investor Bill Gross said 1-month bills are a screaming 'buy' at current levels because history shows a deal will be done, even if it is at the last minute. But what if it is different this time?

Broader markets are feeling the heat. Wall Street and world stocks closed lower on Tuesday, Asian stocks ex-Japan had their biggest fall in two weeks, while gold and the Japanese yen rose.

Here are three key developments that could provide more direction to markets on Wednesday:

- South Korea unemployment (April)

© Reuters. FILE PHOTO: The U.S. Capitol building is seen at night before U.S. President Joe Biden addresses a joint session of Congress during the State of the Union address, in Washington, U.S., February 6, 2023. REUTERS/Evelyn Hockstein

- South Korea current account (March)

- Japan FX reserves (April)

(By Jamie McGeever)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.