In This Article:
* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Nikkei down 0.7%, S&P 500 futures fall
* Caution reigns before U.S. CPI, ECB meeting
* Euro flat after Macron wins first round
* Dollar nears 125 yen as U.S. yields keep climbing
By Wayne Cole
SYDNEY, April 11 (Reuters) - Shares slid and bond yields climbed on Monday as caution gripped markets ahead of central bank meetings and U.S. inflation data, while the euro managed only a brief gain on relief the far right did not win the first round of French presidential elections.
French leader Emmanuel Macron and far right challenger Marine Le Pen qualified on Sunday for what promises to be a tightly fought presidential election runoff on April 24.
A Le Pen victory could send shockwaves through France and Europe in ways similar to Britain's vote in 2016 to leave the European Union (EU). The first round result was close enough to leave the euro barely changed at $1.0883, after an initial pop to $1.0950.
The mood in equity markets was cautious, with MSCI's broadest index of Asia-Pacific shares outside Japan falling 1.3%.
Japan's Nikkei dropped 0.7%, having shed 2.6% last week, while Chinese blue chips lost 2.4%.
S&P 500 stock futures eased 0.6% and Nasdaq futures 0.7%. EUROSTOXX 50 futures lost 0.8%, and FTSE futures 0.4%.
Earnings season kicks off this week with JP Morgan, Wells Fargo, Citi, Goldman Sachs and Morgan Stanley all due to report.
Up to now, Wall Street has fared surprisingly well in the face of a vicious selloff in bonds which saw 10-year Treasury yields surge 31 basis points last week.
Yields were last up at a three-year high of 2.77% , and topped Chinese bond yields for the first time since 2010.
Markets have raced to price in the risk of ever-larger rate hikes from the Federal Reserve with futures implying rises of 50 basis points at both the May and June meetings.
BofA's U.S. economist Ethan Harris now expects half-point hikes at each of the next three meetings and a cycle peak around 3.25-3.50%.
"If inflation looks like it is heading below 3%, then our current call should be hawkish enough," Harris said in a note. "Conversely, if inflation gets stuck above 3% then the Fed will need to hike until growth drops close to zero, risking a recession."
INFLATION TESTS ECB
All of which underlines the importance of the March U.S. consumer price report on Tuesday where the median forecast is for a stratospheric rise of 1.2%, taking annual inflation to an eye-watering 8.5%.
China's inflation figures surprised on the high side on Monday and, while relatively modest at 1.5% year-on-year in March, still dented hopes for aggressive policy easing from Beijing.