(Bloomberg) — Bonds in Australia and New Zealand slipped after Treasuries fell following a higher US inflation print, which led traders to trim bets on a rate cut by the Federal Reserve.
The 10-year bond benchmarks in both countries retreated, sending yields in Australia to 4.24% and those in New Zealand higher by two basis points. Yields on short-term Treasuries, which tend to track expectations for monetary policy, recouped some of its losses from the prior session. Yields on the two-year note fell one basis point to 3.72%.
Meanwhile, data from China slowed across the board in July with factory activity and retail sales disappointing, suggesting the world’s No. 2 economy is losing traction in the third quarter. Chinese shares fluctuated, while Hong Kong’s benchmark index extended losses.
The Topix Index in Japan gained 0.8% as the country’s economy expanded faster than expected last quarter. Hong Kong stocks retreated. Intel Corp. jumped in after-hours trading as the US was said to discuss taking a stake in the chipmaker. In late hours, Applied Materials Inc. gave a downbeat forecast. Contracts for the Nasdaq 100 index retreated 0.2%.
Risk sentiment had been buoyed in previous days by expectations of monetary easing in the US, with traders fully pricing in a quarter-point reduction. But with US wholesale inflation accelerating in July by the most in three years, traders trimmed the odds of a September rate cut to about 90% from previously fully pricing it in.
“Markets shouldn’t take for granted that rates will be cut deeply because there is an inflation problem in the US,” said Kyle Rodda, a senior market analyst at Capital.com in Melbourne.
The higher-than-expected increase in the US producer price index — which suggests companies are passing along elevated import costs tied to tariffs — halted a Treasuries rally and surprised investors.
Traders had piled into bets on a September rate cut, with some wagering on a 50-basis-point move, after a largely benign report on consumer prices this week and comments from Treasury Secretary Scott Bessent in which he said policymakers could bring down borrowing costs as much as 1.5 percentage points.
What Bloomberg Strategists say:
“Treasuries will remain nervous heading into next week’s Jackson Hole event. The risk is for sharp steepening moves, with inflation concerns likely to see long-dated debt underperform.
Garfield Reynolds, MLIV Team Leader.
Meanwhile, China’s new-home prices fell at a faster pace in July, in a further sign that a series of stimulus measures has failed to revive the moribund market.
China’s housing slump has dragged on for more than four years, with sales falling further since the second quarter. Calls for additional policy support have grown as the effects of a stimulus blitz last September wear off.
In commodities, oil was steady for the day and the week, with investors focused on the meeting between the US and Russian presidents later on Friday. Gold headed for a weekly loss, after traders pared bets on the Fed cutting rates next month.
Corporate News:
Guangzhou Innogen Pharmaceutical Group Co., a Chinese biotech firm looking to tap the vast domestic market for obesity drugs, surged as much as 296% in its trading debut in Hong Kong. Hon Hai Precision Industry Co. shares rose as much as 4.3% in Taipei after the company reported better-than-projected 2Q results and forecast strong AI server growth. Warren Buffett’s Berkshire Hathaway Inc. bought shares of UnitedHealth Group Inc. in the second quarter, sending the health insurer’s stock soaring in post-market trading. Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.2% as of 11:22 a.m. Tokyo time Japan’s Topix rose 0.8% Australia’s S&P/ASX 200 rose 0.3% Hong Kong’s Hang Seng fell 1.1% The Shanghai Composite rose 0.2% Euro Stoxx 50 futures rose 0.4% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1652 The Japanese yen rose 0.3% to 147.36 per dollar The offshore yuan was little changed at 7.1847 per dollar Cryptocurrencies
Bitcoin rose 0.7% to $118,800.14 Ether rose 1.9% to $4,622.95 Bonds
The yield on 10-year Treasuries declined one basis point to 4.27% Japan’s 10-year yield was unchanged at 1.560% Australia’s 10-year yield advanced two basis points to 4.23% Commodities
West Texas Intermediate crude fell 0.2% to $63.86 a barrel Spot gold was little changed This story was produced with the assistance of Bloomberg Automation.
–With assistance from Matthew Burgess.
©2025 Bloomberg L.P.