Asian stock markets moved up slightly at the start of Wednesday's session, after Wall Street's sluggish overnight close, closing almost flat. Benchmark indexes in Australia and Japan rose slightly, while US stock futures barely moved. Meanwhile, Chinese stocks listed in the US actually fell around 1.4% due to the market's disappointment at the lack of stimulus signals from the Chinese Communist Party leadership meeting.

In the bond market, the 10-year US Treasury yield held around 4.18% after a debt auction on Tuesday. The dollar index moved flat, and Bitcoin briefly reversed its initial losses. The main sentiment of market participants is now clear: awaiting the Fed's final interest rate decision of the year, complete with the dot plot (interest rate projections), the economic outlook, and Jerome Powell's press conference.

Market participants are almost certainly anticipating a quarter-point interest rate cut this Wednesday. However, more important than simply "cutting or not cutting" is the signal: will the Fed signal another cut in 2026, or is it actually starting to move toward a pause? Currently, the money market is only pricing in about two interest rate cuts in 2026, fewer than expected a few weeks ago. The October US job openings (JOLTS) data, which rose to a five-month high, also helped lift yields from daily lows.

Comments from key figures contribute to shaping expectations. Analyst Tom Essaye said the rate cut itself isn't the most important thing; what's more crucial is whether the Fed sounds dovish or hawkish about the way forward. Kevin Hassett, a leading candidate for Powell's replacement from the White House, believes there's still ample room for a deeper rate cut than just 25 bps. Meanwhile, Tom Lee of Fundstrat even said that if the Fed sounds too hawkish, the White House could soon announce Powell's replacement—and that could be a "clean-up moment" for the market.

In Asia, market participants are also monitoring the yen's movements after Bank of Japan Governor Kazuo Ueda said the BOJ is getting closer to its inflation target. This statement reinforced speculation that the BOJ could raise interest rates at next week's meeting, causing the yen to strengthen briefly, touching levels below 156 per dollar. Globally, the government bond market is under pressure as several central banks signal that the easing phase is nearing its end, such as comments from Michele Bullock in Australia and Isabel Schnabel of the ECB. Amid all this tension, investors are also awaiting the performance reports of technology giants like Oracle and Broadcom, which could further shake market sentiment this week. (asd)

Source: Bloomberg