Eurozone banks are capitalizing on high interest rates by purchasing government bonds with longer maturities than usual. This shift in strategy is fuelled by the European Central Bank's reduced involvement in the market and the banks' preference for government bonds over cash as a liquidity buffer. While asset managers are still the top buyers of government debt, banks have been the primary purchasers in several syndication sales this year, supported by the markets' expectation that the deposit rate would reach nearly 4% by the end of the year.
EQUITY
US stocks rebounded slightly on Monday after last week's losses, but uncertainty around interest rate hikes and sticky inflation led to high volatility. Rising interest rates could also hurt Asian stocks by reducing foreign capital flows. Occidental Petroleum missed its earnings target for the second quarter, and Target Corp. earnings are in focus as retail sales unwavering in the face of inflation.
GOLD
On Monday, gold prices regained some ground from their yearly low, yet stayed steady as market players held back on any activity while they awaited crucial US economic updates and anticipated an increase in interest rates. The yellow metal has observed four consecutive weeks of losses as traders worry the Federal Reserve will raise rates due to the US PCE and consumers displaying greater strength than expected.
OIL
Oil prices were stable in Tuesday's Asian trade as traders awaited key business activity readings in the US and China. Rising interest rates and concerns over a slow economic recovery have caused steep market losses. Optimism for a recovery in China lifted prices, with economists predicting growth in factory activity in February.
CURRENCY
Most Asian currencies were relatively stable against the U.S. dollar as the markets awaited economic and monetary policy readings. The euro and British pound both rose on Monday after Britain and the European Union announced a new deal for post-Brexit trading arrangements for Northern Ireland.