Asian equities are poised for a strong bullish trend, spurred by a significant shift in global financial markets. This shift has seen stocks, bonds, and gold all surge, while the US dollar faces a notable slump, primarily in response to the Federal Reserve’s dovish stance. In the bond market, the 2-year Treasury yield has experienced a sharp drop of nearly 30 basis points, now at 4.45%, and the 10-year yield has also declined, testing a level just below 4.00%. These movements come in the wake of the Federal Reserve’s latest meeting, where it made discernible dovish adjustments to its statement guidance and lowered its 2024 median dot projection, suggesting three rate cuts in 2024. This marks a significant deviation from its previous forecast of just one cut.
The focus now shifts to today’s packed financial calendar, which is brimming with critical data releases and central bank decisions. The day kicks off with New Zealand’s GDP figures and Australia’s employment data, setting the stage for consequential decisions from several key central banks. These include the Swiss National Bank, Norges Bank, the Bank of England, and the European Central Bank. Additionally, US data is under close scrutiny, especially with the commencement of technical positioning ahead of a major quarterly expiry of futures and options, following a strong 6-week performance. Currently, the market sentiment leans towards a dovish orientation, reflecting a strategic pivot from inflation concerns to growth prospects as we look towards 2024. This shift is likely to be a primary driver of market dynamics in the upcoming quarters.
