Bonds cheer Fed talk of cuts; kiwi flies
economictimes.indiatimes.comAsian stocks briefly made one-week highs on Wednesday, bonds rallied and the dollar sank on new hints at U.S. interest rate cuts, while the New Zealand dollar jumped after its central bank said another hike may be necessary if inflation proves stubborn.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.5% in early trade before weakness in Hong Kong tech shares dragged it back to flat.
Japan's Nikkei fell 0.2%.
The New Zealand dollar was last up 1.1% at a four-month high of $0.6207, having blown past resistance.
The U.S. dollar, meanwhile, slid to fresh multi-month lows on the euro, yen, sterling, the Australian dollar, yuan and Swiss franc. Gold hit a seven-month high above $2,051 an ounce.
Overnight Fed Governor Christopher Waller — an influential and previously hawkish voice at the U.S.
central bank — told the American Enterprise Institute that rate cuts could begin in a matter of months, provided inflation keeps falling.
Fed funds futures rallied on the remark to price more than hundred basis points of cuts in 2024 and 40% chance they begin as soon as March. Two-year Treasury yields fell sharply and along with the dollar fell further still in Asia.
«The market clearly moved on Governor Waller's opening up the possibility of cuts,» said Tapas Strickland, head of market economics at National Australia Bank in Sydney. Waller's remark echoed earlier comments made by Fed Chair Jerome Powell.
The two-year yield hit its lowest since mid-July at 4.70% and the benchmark 10-year yield fell 4 bps to its lowest since September at 4.30%.
The dollar was last down 0.5% at 146.68 yen, its lowest since Sept.
12 and a drop of nearly 2% in three days. It touched a 3-1/2 month low at $1.1017 per euro. [FRX/]
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