Asian equities were set to advance Friday after a fourth day of gains on Wall Street as the latest batch of economic data did little to dissuade investors about the trajectory of anticipated Federal Reserve rate cuts.

Equity futures in Japan, Australia and Hong Kong climbed, with each rising by less than 1% in a sign of muted risk appetite. A pause in the yen’s strengthening trend boosted Japanese exporters on Thursday, with the currency trading just below 142 per dollar in early trading.

Treasury 10-year yields advanced two basis points to 3.67% Friday and an index of the dollar fell. German bunds snapped a seven-day winning streak after European Central Bank President Christine Lagarde said rates will be sufficiently restrictive in the wake of an expected quarter-point interest rate cut to 3.5%. Oil climbed. Gold hit an all-time high.

The US producer price index picked up slightly in August after the previous month’s numbers were revised lower, and categories that feed into the Fed’s preferred inflation gauge were muted. Separate data showed jobless claims ticked up.

The data did little to alter expectations the Fed will trim rates when its monetary policy committee meets next week, but for some kept alive the idea the first cut may be 50 basis points, twice the regular cadence.

“We think PPI sustains a lingering possibility of a starter 50, which would take less risk with the soft landing,” said Krishna Guha at Evercore.

Thursday’s wholesale inflation data followed the more closely watched consumer price index, which showed underlying inflation accelerated in August. Yet policymakers have made it clear that they’re currently highly focused on softness in the labor market, which is more likely to drive policy discussions in the months ahead. 

“With PPI basically repeating yesterday’s CPI reading and jobless claims in line with expectations, the decks have been cleared for the Fed to kick off a rate-cutting cycle,” said Chris Larkin at E*Trade from Morgan Stanley. “The markets are anticipating an initial 25 basis-point cut, but the discussion will soon turn to how far and fast the Fed is likely to trim rates over time.

In Japan, just over half of central bank watchers see authorities conducting their next rate hike in December, while none expects a policy move when the board meets next week, according to a Bloomberg survey. 

In the past four weeks, five of nine board members have telegraphed their intention to raise rates again if the bank’s inflation outlook is realized. Market volatility in the days after the Bank of Japan’s July 31 rate hike hasn’t spooked policymakers enough to derail them from the normalization path.

“Chances are extremely low for a rate hike at this meeting,” Masamichi Adachi, chief Japan economist at UBS Securities, said. “It’s too early to discern the impact of the July rate hike and market rout.”

Elsewhere in Asia, data set for release includes Japan industrial production, trade balance figures for India and gross domestic product for Sri Lanka.

West Texas Intermediate, the US oil price, rose more than 2% Thursday after storm Francine disrupted production in the Gulf of Mexico.

  - Bloomberg