As Fed Anxiety Increases, Stocks Struggle and Yields Rise – Asia Market Wrap

Global equities dipped, while Treasury rates moved higher again, as traders became concerned about the Fed’s pace of easing beyond this week’s almost anticipated interest-rate decrease.

MSCI Inc.’s global equities index fell 0.1%, while a measure of Asian shares fell 0.5%. US market futures were barely moved, while contracts for the Euro Stoxx 50 remained steady. Yields on US Treasuries edged higher as Australian bonds plunged amid hawkish commentary from the central bank while an auction of five-year Japanese government debt was met with tepid demand.

While the Fed is widely expected to decrease interest rates by 25 bps on Wednesday, some traders have expressed concern that the US central bank may imply a slower pace of easing in the future. That’s because continued rising inflation and a lack of new data during the closure have generated disagreement among Fed officials.

The Yen stabilised after plunging on Monday, when a magnitude-7.6 earthquake occurred off Japan’s northeast coast. On Tuesday, shares of construction and insurance companies increased. Finance Minister Katayama said she is actively monitoring market patterns, as the yield on 10-year government debt approaches 2%, a level not seen since 2006.

Meanwhile, the Dollar dipped down and Bitcoin lost around 1.5%. Gold and silver remained rangebound after falling on Monday. Oil prices have stabilised after the steepest decline in nearly three weeks, as traders await data this week to assess the depth of the surplus.