SYDNEY – Asian share markets were mixed on Monday as a top US central banker warned investors against getting carried away over one inflation number.
A modest miss on US inflation was enough to see two-year Treasury yields dive 33 basis points for the week and the dollar lose almost 4 percent, the fourth biggest weekly decline since the era of free-floating exchange rates began over 50 years ago.
However, the resulting easing in US financial conditions was not entirely welcomed by the Federal Reserve with Governor Christopher Waller saying it would take a string of soft reports for the bank to take its foot off the brakes.
Waller added the markets were well ahead of themselves on just one inflation print, though he did concede the Fed could now start thinking about hiking at a slower pace.
Futures are wagering heavily on a half-point rate rise to 4.25-4.5 percent in December and then a couple of quarter-point moves to a peak in the 4.75-5.0 percent range.
Two-year yields edged up to 4.41 percent, after diving as deep as 4.29 percent on Friday.
"The CPI downside surprise aligns with a broad range of indicators pointing to a downshift in global inflation that should encourage a moderation in the pace of monetary policy tightening at the Fed and elsewhere," said Bruce Kasman, head of economic research at JPMorgan.
"This positive message needs be tempered by the recognition that downshift in inflation will be too little for central banks to declare mission-accomplished, and more tightening is likely on the way."
MSCI's broadest index of Asia-Pacific shares outside Japan added 0.8 percent, after jumping 7.7 percent last week.
Japan's Nikkei eased 0.6 percent, while South Korea went flat. S&P 500 futures dipped 0.3 percent and Nasdaq futures lost 0.4 percent.
EUROSTOXX 50 futures gained 0.4 percent, while FTSE futures tacked on 0.1 percent.
The euro eased a touch to $1.0324, after climbing 3.9 percent last week, while the dollar firmed to 139.27 yen following last week's 5.4 percent drubbing.
The dollar lost almost as much to the Swiss franc, steered in part by warnings from the Swiss National Bank that it would use rates and currency purchases to tame inflation.
Sterling eased back to $1.1790 ahead of the UK Chancellor's Autumn Statement on Thursday where he is expected to set out tax rises and spending cuts.
Crypto currencies remained under pressure as at least $1 billion of customer funds were reported to have vanished from collapsed crypto exchange FTX.
Bitcoin was trading down 1.5 percent at $16,055, having shed almost 22 percent last week.
The dollar's recent retreat provided a much-needed fillip to commodities, with gold holding at $1,763 an ounce after jumping over $100 last week.
Oil futures extended their gains with Brent up 63 cents at $96.62, while US crude rose 56 cents to $89.52 per barrel.