Asian stocks and currencies, led by tech companies, experienced a relief rally. The surge spread from Sydney to Hong Kong, with gains in emerging-market currencies led by the South Korean won and the yen. U.S. stock futures also rose.
Long-term Treasury yields surged, indicating the Federal Reserve’s reduced inclination to tighten policy. Fed Chair Jerome Powell hinted at a pause, allowing time to assess the need for further action against inflation.
Regional bonds rebounded with Treasury 10-year yields dropping 20 basis points. New Zealand’s yields led the decline, and Japanese government bond yields also fell despite weak demand at a recent bond sale.
Jerome Powell’s less hawkish stance than expected led to a rally in stocks and bonds. The market now believes the Fed might be nearing the end of its rate hikes.
The Fed kept the federal funds rate unchanged at 5.25% to 5.5%, the highest since 2001. The Fed described the rate of economic growth as “strong,” indicating a slowdown in the pace of rate increases.
Australia’s trade balance was lower than forecasted at 6786M, with exports decreasing by 1% and imports rising by 8%.
South Korea’s Consumer Price Index (CPI) year-on-year was 3.8%, higher than the forecast of 3.6%. Month-on-month CPI was 0.3%, slightly above the 0.2% forecast.
Following the visit of China’s Foreign Minister Wang Yi to Washington, the U.S. and China plan to hold consultations on arms control, non-proliferation, maritime affairs, and other issues.