Hang Seng Index, ASX 200, Nikkei 225: Asian Markets Up on Fed Rate Cut Bets

US Markets: US Treasury Yields Slide and Equity Markets Rally

Rising bets on a September Fed rate cut impacted 10-year US Treasury yields, which fell 51 basis points to 4.194%. Falling US Treasury yields drove buyer demand for riskier assets. The Dow rallied 1.64%, while the Nasdaq Composite Index and the S&P 500 gained 1.03% and 1.11%, respectively.

Expert Views on US Inflation

Arch Capital Global Chief Economist Parker Ross said,

“The June PCE price index printed right in-line with expectations at 0.08% m/m, continuing the string of soft headline inflation reports for the month. Market odds of a Sept rate cut were roughly unchanged after the report at ~110% (i.e., a 25bps cut fully priced in, with some expecting a potential 50bps cut).”

Friday’s gains set the tone for the Monday Asian session. However, Mainland China markets had a negative start to the week, with growth concerns lingering,

China Growth Concerns Linger

Investor concerns about China’s economic outlook lingered. The recent People’s Bank of China (PBoC) moves to boost demand highlighted Beijing’s concerns about growth. However, rate cuts have failed to drive buyer demand for Mainland-listed stocks. Disappointment over the outcome of the Third Plenum amid uncertain US-China relations likely affected investor sentiment.

Natixis Asia Pacific Chief Economist Alicia Garcia Herrero commented on the Third Plenum, saying,