Asian Stocks Rise, Bonds Fall as Fed Patience Shows
Asian stocks are set to rise on Wednesday, while bond yields rose after Federal Reserve Chairman Jerome Powell signaled patience before cutting interest rates further.
Equity-index futures pointed to gains for Japanese and Hong Kong stocks, while shares in Australia were steady at the open. The S&P 500 was mostly flat as most major technology companies fell, although Meta Platforms Inc. fell for a 17th straight day. Government bonds fell across the board on Tuesday, with money markets still fully pricing in one Fed rate cut this year. Australia’s 10-year yield rose four basis points in early trading on Wednesday.
The Fed is in no rush to adjust interest rates, Powell told Congress, largely echoing remarks in January, after leaving the key policy rate unchanged following cuts at each of the last three meetings in 2024. Officials have signaled that they are likely to keep rates steady until they see more progress in lowering inflation, and as they await more details on President Donald Trump’s economic policy plans.
Policymakers are taking an “extended pause on rates,” but remain oriented toward lowering borrowing costs further if and when there is further sustained progress in inflation, said Krishna Guha at Evercore ISI.
In Asia, the Indian rupee rose the most in more than two years on Tuesday on speculation of strong intervention by the central bank, surprising traders after the currency hit a series of record lows in recent weeks.
While the Reserve Bank of India did not disclose the size of its intervention, Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors, suggested it could be at levels previously unseen by the authority.
The Vietnamese dong fell to a record low against the dollar on Tuesday as emerging-market currencies came under pressure from the growing threat of tariffs. Levy’s rhetoric has fueled broad strength in the greenback, with trade-dependent countries such as Vietnam particularly vulnerable. Meanwhile, the European Union has vowed to respond to the 25% tariffs Trump has said the U.S. will impose on steel and aluminum imports, raising the prospect of a trade dispute with one of Washington’s closest allies.
Source: Bloomberg
