(Dec 10): Asian stocks looked set to track a sluggish session on Wall Street as investors awaited clues on the Federal Reserve’s policy path in its final interest-rate decision of the year.
Equity-index futures pointed to modest losses for Japan and Hong Kong, and Australian stocks edging higher at the open, after the S&P 500 closed little changed. A gauge of US-listed Chinese stocks fell 1.4% following a lack of stimulus signals from a meeting of top Communist Party leaders.
The rate on 10-year Treasuries hovered at around 4.19% following a government bond auction, while the dollar was little changed and Bitcoin reversed early losses.
The moves underscore the challenges Fed policymakers face with increased focus on the dot plot and economic projections, as well as comments from Chair Jerome Powell. Volatility around the rate decision has been among the defining characteristics of equity trading in the past six weeks — superseding worries about an AI bubble and the impact from President Donald Trump’s trade policies.
Money markets are pricing around two cuts in 2026 after a likely quarter-point reduction on Wednesday — a retreat from more optimistic forecasts in recent weeks.
“It’s not too much of an exaggeration to say that the rate cut is actually the least important part of this meeting,” said Tom Essaye, the founder of The Sevens Report. The market “cares much more that the Fed signals it will continue to cut rates and does not signal a pause in the rate-cut cycle.”
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Yields rebounded from session lows reached during the US morning after data showed October job openings increased to the highest level in five months. While traders continue to almost fully price in a quarter-point rate cut by the Fed this week, the central bank’s two previous cuts this year were intended to address weakening employment conditions, including a rise in the unemployment rate to nearly 4.5%.
Kevin Hassett, the frontrunner in Trump’s search to replace Powell, said at an event Tuesday that he sees plenty of room to substantially lower rates, even more than a quarter-point cut.
“If the Fed is too hawkish, we expect the White House to soon announce Powell’s replacement,” said Fundstrat’s Tom Lee. That would be a “market clearing event” in his view.
See also: Asian stocks look lower as Fed rate anxiety builds
In Asia, market watchers will be focusing on the yen after Bank of Japan governor Kazuo Ueda said the central bank is getting closer to attaining its inflation target, adding to signals that the BOJ may raise its interest rate at a policy meeting next week.
The yen strengthened a touch as Ueda’s comments were streamed, briefly dipping below the 156 mark against the dollar.
Globally, government debt markets have been under pressure as central bankers signal that their easing cycles are coming to an end. On Tuesday, Australia’s Michele Bullock declared her country’s easing phase over, following comments from the European Central Bank’s Isabel Schnabel that she’s comfortable with the next move being higher.
“Given all the tension in global bond markets at the moment, the meeting of the Fed could potentially add fuel to the fire,” said Vincent Juvyns, chief investment strategist at ING in Brussels. “Investors will also be watching very closely the results of Oracle and Broadcom. There’s a lot at stake this week.”
In commodities, silver topped US$60 an ounce for the first time on continued supply tightness. Gold also climbed.
Uploaded by Isabelle Francis
