Inflationary fears abated on Oct 11 following the release of the producer price index, which was flat month-on-month and up 1.8% y-o-y, and below expectations. The more stubborn consumer price index, which ticked up a tad, had done some damage to yields. The 10-year US Treasury yield is at 4.1%, the highest level since July. The 2-year US Treasury Yield dipped below 4%, and the 30-year is at 4.4% as at Oct 11, suggesting that the yield curve remains normalised.
In North Asia, the Hang Seng Index rebounded on Oct 11. However, the Lion-OCBC Securities HS Tech ETF (HSTECH) ended the week of Oct 7-11 at 75.5 cents, near its low of the week. The high of 87.9 cents, attained on Oct 7, was the highest level the ETF had reached in just over two years. Short-term indicators suggest further consolidation ahead. The immediate support for HSTECH is at 75 cents. If short-term RSI continues to fall, this support may give way, with prices moving to nearer 72 cents.
The Straits Times Index appears similarly precarious. The local bellwether has been hovering around 3,575 since Sept 26, establishing this level as a support. Both short-term RSI and quarterly momentum are falling, suggesting that the STI is likely to experience a further consolidation. Support appears at the psychological 3,500 should 3,575 give way.
The Chinese Ministry of Finance is holding a press conference on Oct 12 to brief on fiscal measures to shore up growth.
Elsewhere, the Federal Reserve’s September minutes show a majority of governors and Fed policymakers were in favour of a 50-basis point cut, with only one dissenting vote.
See also: STI steadies despite overbought US markets and rising US risk-free rates
