Asian stocks fluctuate with Fed’s pace in focus
interest rate cuts.
Stocks moved between losses and gains in Japan and South Korea, with those in Australia modestly higher. Futures pointed to gains in Hong Kong. US contracts were flat after the S&P 500 closed little changed. Treasury 10-year yields hovered near 4.2% after topping that level for the first time since July.
Wall Street is paring back bets on aggressive policy easing as the US economy remains robust while Fed officials sound a cautious tone over the pace of future rate decreases. The prospect of bigger fiscal deficits after the upcoming presidential election are only compounding the market’s concerns. Since the end of last week, traders have trimmed the extent of expected Fed cuts through September 2025 by more than 10 basis points.
“The recent rise in bond yields is likely due to the market adjusting to the increasing probability of a Trump election victory and the higher inflation and fiscal spending it will bring,” said Tony Sycamore, a market analyst at IG Australia. “Equities are unlikely to respond well if yields were to resume their march higher in the sessions ahead.”
The US stock market has rallied this year thanks to a resilient economy, strong corporate profits and speculation about artificial-intelligence breakthroughs — sending the S&P 500 up over 20%. Yet risks keep surfacing: from a tight US election to war in the Middle East and uncertainty around the trajectory of Fed easing.
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