23/10/2024 Daily Reports
The dollar rose against major currencies, impacting Asian shares as investor sentiment weakened due to the prospect of slower Federal Reserve interest rate cuts. US 10-year Treasury yields climbed past 4.2%, contributing to a global bond selloff, with Japan’s 40-year yields reaching a 16-year high.
Asian equities were mixed, with declines in Japan offset by gains in Hong Kong and China. Hong Kong stocks benefited from a proposal for a $281 billion market stabilization fund. Investors are tempering hopes for rapid policy easing amid strong US economic signals and concerns over fiscal deficits.
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Could the Dollar’s Rally Be Just Beginning ?
The U.S. dollar surged to a 2.5-month high on Tuesday, fueled by expectations that the Federal Reserve will take a cautious approach to interest rate cuts. Strong economic data has lifted U.S. Treasury yields, keeping the dollar on a winning streak as the U.S. presidential election approaches.
The 10-year Treasury yield hit 4.222%, its highest since July, and traders are now pricing in an 89.6% chance of a 25 basis point rate cut in November. Just a month ago, many were betting on a larger cut. “The Fed’s approach is diverging from other central banks, and that’s driving the dollar higher,” said Macquarie’s Thierry Wizman.
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