Morning Bid: Nerves stretched, China data dump kicks off key week

investing.com:

By Jamie McGeever

(Reuters) — A look at the day ahead in Asian markets.

A batch of top-tier Chinese economic data releases gets Asian markets underway on Monday, with sentiment pretty fragile after last week's global market wobble and as investors brace for U.S. and Japanese policy decisions later in the week.

Asian equity markets are on the defensive. The MSCI Asia ex-Japan index's 1.4% slump on Friday — its steepest since January — sealed its biggest weekly loss in two months, while Japan's Nikkei 225 lost 2.5% for its biggest weekly loss this year.

The sharp rebound in U.S. bond yields is taking its toll on risk appetite, and was probably the main catalyst for the selloff in global stocks last week.

The ICE BofA U.S. Treasuries index fell every day last week, its worst run since August resulting in the biggest weekly fall since October. The two-year yield rose 24 basis points, almost the equivalent of a quarter-point rate hike.

The Asia and Pacific calendar this week is packed with hugely important economic data releases and central bank policy meetings, none more so than the Bank of Japan's two-day meeting that starts on Monday.

Expectations are high that the BOJ will raise interest rates for the first time since 2007, bringing the curtain down on eight years of 'negative interest rate policy', or NIRP.

Japan's biggest companies agreed to raise wages by 5.28% for 2024, the heftiest pay hikes in 33 years, the country's largest union group said on Friday, reinforcing views that policymakers will make their historic move on Tuesday.

Sources have also told Reuters that the BOJ will offer guidance on how much government bonds it will buy upon ending NIRP and yield curve control (YCC), to avoid causing market