Treasury bond yields increased across all tenors, with the benchmark 10-year bond trading at about 4.25%. Even after Powell stated the Fed is prepared to rise further if necessary and that policy is “well into restrictive territory,” US government bonds had surged on Friday as swaps priced in a cut by May.
Gold, on course for a record close, dropped from previous intraday highs, currently trading at $2,085.34 an ounce. With further permits for exchange-traded funds expected in the US, bitcoin continued its multi-month rally, rising over 3% to its highest level since April 2022. Asian stock markets had mixed results, with Australian and Korean equities rising and Japanese stocks declining. Futures for the S&P 500 were stable.
Fundstrat’s chief of research Tom Lee stated in a letter on Sunday that “we are in a zone of uncertainty” due to the abundance of economic data that would be released before the Fed’s policy meeting the following week. He continued, saying, “Markets may be consolidating, but we think dip buying prevails and December is an up month” for US stocks.
Stocks in Hong Kong and the Chinese mainland were losing ground. However, when a Hong Kong court again delayed a judgement on whether to wind up the world’s most indebted property developer, shares of troubled developer China Evergrande Group shot up as much as 22%.
Due this week are three key economic indicators: Australian growth, Chinese inflation, and US non-farm payrolls statistics. Traders will be keeping an eye out for any signs of the state of the global economy. After governor Michele Bullock cautioned that inflation is now domestically produced, the Reserve Bank of Australia is anticipated to sound more aggressive when it maintains its rate on hold on Tuesday.
Tony Sycamore, an analyst at IG Group in Sydney, stated in a note to clients that “sticky ‘homegrown’ services inflation will ensure a tightening bias is retained,” even if the RBA will remain on hold due to the lower-than-expected inflation. “The outcome of the December quarter inflation, which is scheduled for release in late January, will determine whether rates are hiked in February.”
When Wall Street reopens on Monday, US airline stocks will be the main topic of discussion. This is because Alaska Air Group Inc. has agreed to pay $1.9 billion to acquire Hawaiian Airlines, a competitor of Hawaiian Holdings Inc.
Investors will also be monitoring Middle East geopolitical issues. Israel has begun its military campaign in Gaza again; the Houthi rebels in Yemen have said that they have targeted two Israeli ships; and an American vessel was assaulted in the Red Sea.