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Strategies & Market Trends : Aardvark Adventures -- Ignore unavailable to you. Want to Upgrade?

To: ~digs who wrote (4616)	4/27/2008 11:39:47 PM
From: Galirayo	Read Replies (1) \| Respond to of 7944

TOKYO/SINGAPORE (Reuters) - Investors rushed to bet on higher interest rates on Friday, dumping bonds on a conviction the world's top central banks were turning from nursing economies hobbled by a credit crisis to battling inflation. The main Japanese bond futures contract suffered its biggest daily fall in five years, forcing the Tokyo Stock Exchange to call a trading halt for the first time ever. Euro zone government bonds fell on Friday and U.S. Treasuries took a hit in Asian trade. Although the bond rout followed news that inflation in Japan had hit a decade peak, expectations of higher rates had been building for days on signs the global economy had seen off the worst of the turmoil ignited by U.S. mortgage defaults. The biggest shift in outlook has come with the Federal Reserve, which has slashed interest rates by 3 percentage points since September to cushion the U.S. economy from the fallout of the credit crisis. The Fed is now expected to keep interest rates on hold after a quarter-point trim to 2 percent next week and perhaps tweak the language of its post-meeting statement to reflect that it may be nearly finished after chopping rates from 5.25 percent. Just a month ago, investors were looking for the Fed to cut to rates as low as 1 percent to help revive the economy. "Receding expectations for Federal Reserve interest rate cuts, rather than views about a Bank of Japan rate hike, and growing concern for inflation risks are behind the JGB tumble," said Keiko Onogi, senior JGB strategist at Daiwa Securities Continued... reuters.com AUSTRALIAN INFLATION In Australia, markets awoke to the possibility that the central bank could lift rates for a third time this year after data showed core inflation accelerating at the fastest pace in 17 years and well beyond the Reserve Bank's target. A renewed focus on inflation and improvement in the appetite for riskier investments like stocks have all conspired to undermine government bonds. kitco.com