(Reuters) – Future outlook for the Asian market.
Short-term confidence that the Fed would stick to its dovish path evaporated after Friday’s disappointing payrolls announcement, sending Treasury yields above 4% on Monday and traders suggested there was a small chance there would be no rate cut at all in November.
The Fed’s reconsideration has dampened Wall Street, but the prospect that the U.S. economy can avoid recession need not derail Asia’s recovery. It will provide fresh international context as mainland Chinese investors return from their Golden Week holiday on Tuesday and weigh last month’s market relief with a sober eye.
The Chinese government has launched the most aggressive stimulus package since the coronavirus pandemic to revive China’s flagging economy, but traders and investors are now looking for signs of whether the drug is working. There is.
Yields on 10-year and 2-year Treasuries are rebalancing as federal funds futures rebalance to an 85% chance of a quarter-point decline in November and a 15% chance of a 15-point decline in November. They rose to their highest levels since late July and mid-August, respectively. The Fed will remain silent at its next meeting.
Just a week ago, some supported the Fed repeating September’s 50 basis point rate cut at next month’s meeting. The resilience of the labor market made the case for a more hawkish Fed, and the S&P 500 index fell nearly 1%.
The dollar, which had consolidated its rally last week, had little impact, ending slightly weaker against the yen and Swiss franc. On the anniversary of the Hamas attack on Israel that sparked the Gaza war, the dollar generally remained tender, as did these two safe-haven currencies, as severe tensions in the Middle East threaten to spill over into a broader conflict. .
The dollar fell by about 0.5% against the yen after rising to more than $149 overnight, its highest since Aug. 15.
A weaker yen pushed Japan’s Nikkei stock average up about 2% on Monday, leading broader gains across the region.
MSCI’s broadest index of Asia-Pacific stocks rose almost 1%, while the Asia ex-Japan index rose nearly 0.5%.
Here are the key trends that could give further direction to the market on Tuesday:
– Australian consumer sentiment (October)
・Japan Tankan Manufacturing and Service Industry Index (October)
– Taiwan trade balance (September)
– US 3-year bond auction
(Reporting by Alden Bentley in New York; Editing by Bill Berkrot)
