Monday saw a decline in Asian share markets due to concerns over growth in China and the United States. However, European and American stock futures saw a little uptick, and bond rates began to rise from their recent lows.

China continued to be the major force behind global disinflation, according to data on consumer prices (CPI), with producer prices falling 1.8% annually in August compared to experts' expectations of a 1.4% decline.

With nearly all of the increase in food prices and only a 0.2% increase in goods prices, the CPI missed estimates as well, coming in at 0.6% for the year, suggesting weak domestic demand.

Chinese blue chips, which had already lost 2.7% the previous week, fell 1.0% to seven-month lows.

Fed fund futures fell as traders bet that the August payrolls data, which was mixed, would be sufficient to convince the Federal Reserve to reduce interest rates by an excessive 50 basis points at its meeting the following week.

Markets currently project a 30% likelihood of a significant decrease, partly as a result of remarks made on Friday by New York Fed President John Williams and Fed Governor Christopher Waller, but Waller did leave open the possibility of aggressive easing.

Investors have priced in 113 basis points of easing by Christmas and a further 132 basis points for 2025, indicating that they are significantly more dovish.

Wednesday's data on August consumer prices in the United States should strengthen the argument for a decrease if not the exact amount, since headline inflation is predicted to drop from 2.9% to 2.6%.

In their first debate before November 5th's presidential election, Democratic candidate Kamala Harris and Republican candidate Donald Trump will square off on Tuesday.

Though the markets are less certain if the European Central Bank would relax in October and December, they are fully priced for a quarter-point decrease on Thursday.

Bond prices rose on the possibility of a worldwide policy easing, resulting in 15-month lows for 10-year Treasury rates and the lowest two-year levels since March 2023.

Monday saw some profit-taking in bonds as the 10-year yield increased to 3.748% and the two-year yield slightly increased to 3.704%, while the yield curve was still close to its sharpest point since mid-2022.

(Sources: investing.com, reuters.com)