* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Shares little moved awaiting Sino-US trade talks
* Wagers on dovish Fed push down yields and dollar
* Gold extends gains as rates and dollar drop
By Wayne Cole
SYDNEY, June 25 (Reuters) - Asian stocks were left adrift on
Tuesday as expectations of more dovish talk from the Federal
Reserve pushed down Treasury yields and the dollar, while
lifting gold to six-year peaks.
Equity investors are waiting to see if anything will come of
Sino-U.S. trade talks later this week. U.S. President Donald Trump is slated to meet one-on-one
with at least eight world leaders at the G20 summit in Osaka,
including China's President Xi Jinping and Russian President
Vladimir Putin.
Early trade was very light with MSCI's broadest index of
Asia-Pacific shares outside Japan .MIAPJ0000PUS up a minor
0.09%. Japan's Nikkei .N225 was all but flat, as was the South
Korean market .KS11
E-Mini futures for the S&P 500 ESc1 edged up 0.08% after a
lacklustre session on Wall Street. The Dow .DJI ended Monday
up 0.03%, while the S&P 500 .SPX lost 0.17% and the Nasdaq
.IXIC 0.32%.
There are no less than five Fed policy makers speaking on
Tuesday, including Chair Jerome Powell, and markets assume they
will stick with the recent dovish message.
"It's always possible the chair could walk back some of the
market's dovish interpretation of last week's FOMC meeting...but
we suspect he will reinforce the message laid out last week,"
said Kevin Cummins, a senior U.S. economist at NatWest Markets.
"By the end of July, we believe the Fed will have seen enough
to decide that action to counter downside economic risks and low
inflation/inflation expectations is warranted, and so we look
for a 25 basis point rate cut at the next FOMC meeting."
Markets are running well ahead of that. Futures 0#FF: are
fully priced for a quarter-point easing and imply a real chance
of a half-point move.
A total 100 basis points of cuts are implied by mid-2020, a
major reason two-year yields US2YT=RR are well under cash at
1.745%. FEDWATCH
GOLD SOARS
Yields on 10-year Treasuries US10YT=RR have dived 120
basis points since November and, at 2.01%, are almost back to
where they were before Trump was elected in late 2016.
The speed and scale of the latest decline has seen the
dollar fall for four sessions on a row against a basket of other
currencies to stand at a three-month low of 95.980 .DXY .
"USD DXY is now looking it likely will break through the
March low of 95.76 and below there 95.0," said Tapas Strickland,
a markets strategist at NAB.
"The drivers here continue to be heightened expectations of
the Fed cutting rates - now 3.1 cuts priced by years' end -
while data surprise indexes show the U.S. data flow is now
disappointing more than for Europe."
The euro has climbed to its highest in three months and was
last holding firm at $1.1403 EUR= , within striking distance of
the March top of $1.1448.
Against the safe-haven yen, the dollar has hit its lowest
since the January flash crash and was last at 107.33 yen JPY= .
The pullback in the dollar combined with lower yields
globally has put a fire under gold, which touched a six-year top
overnight. The metal is up 12% since early May at $1,1426.39 an
ounce XAU= , with the next target the 2013 top of $1,433.
GOL/
Oil prices consolidated after rising sharply last week in
reaction to tensions between the United States and Iran. O/R
Brent crude LCOc1 futures firmed 8 cents to $64.94, while
U.S. crude CLc1 was unchanged at $57.90 a barrel.
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Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
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