Hong Kong Stocks Rise, Bonds Fall After Powell – Asia Market Wrap
Bond yields rose as Fed Chair Powell signalled prudence in cutting interest rates further, and investors are looking ahead to the upcoming US CPI data. Hong Kong equities rose, boosted by advances in Alibaba and BYD.
US equity index futures fell, while contracts in Europe rose somewhat. Treasuries moved lower after sliding across the curve on Tuesday, with money markets still fully pricing in one rate decrease this year from the Fed. Yields on Japanese 5-year bonds have risen to 1% for the first time since 2008. Australian 10-year yields increased. The Yen fell for the third consecutive day.
Investors are apprehensive ahead of Wednesday’s CPI report, despite Powell telling Congress that the Fed does not need to rush to raise interest rates, indicating that the economy is still strong. The Fed held its benchmark policy rate unchanged in January, implying that the slow progress towards reduced inflation necessitated a patient approach.
The Yen is on track for its longest losing streak in more than a month, fuelled by growing concerns that Japan may be included in Trump’s tariff plan. On Wednesday, the Euro performed the poorest among its Group of 10 peers. On Wednesday, the Japanese government asked Trump to spare its companies from new tariffs.
