Morning bid: U-turn causes big turn

Sep 28 (Reuters) – Jamie McGeever’s Outlook on Asian Markets

Investors may not pay much attention to Vladimir Lenin, but they will undoubtedly agree with the Soviet revolutionary’s 1917 observation:

Take the UK, for example, where Friday’s government budget sparked strength in the pound and gold coins, accelerating the downdraft across global markets before prompting a surprise policy U-turn from the Bank of England on Wednesday.

The BoE, which was raising interest rates and was about to start “QT” sales of heifers into the market, intervened in bonds, offering a “temporarily” unlimited promised to buy

That unleashed a buying wave across UK assets, sending yields on 30-year gold coins down a record 100 basis points and the pound gaining 1.5%.

Global equities and the S&P 500 fell for the sixth straight day, with the S&P 500 up about 2%. Yields on 10-year Treasuries, which had been above 4%, plunged 25 basis points in the biggest one-day drop since 2009.

But how long will the easing last? Investor confidence in the credibility of policymakers has steadily declined, and financial conditions continue to tighten due to a strong dollar and high US Treasury yields.

Next is China. The People’s Bank of China said on Wednesday that stabilizing the currency market was its top priority after the yuan fell to its lowest level since 2008. ?

Key developments that could give the market more direction on Thursday:

US Final GDP and PCE (Q2)

U.S. Weekly Unemployment Insurance Claims

Federal Reserve Daily Speaks

ECB’s De Guindos, Rehn and Panetta speak

BoE’s Ramsden Speaks

Reported by Jamie NcGeever of Orlando, Florida.Editing by Josie Kao

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