A currency trader passes by the screens showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won, center, at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Thursday, Nov. 2, 2023. Asian shares were mostly higher Thursday after the U.S. Federal Reserve indicated it may not need to pump the brakes any harder on Wall Street and the economy.
“It’s no surprise that Asian markets are responding positively to the gains in U.S. stocks and bonds after the Federal Reserve suggested its policy tightening cycle may be reaching the end of the runway. So maybe it is time to start engineering that elusive soft landing officially,” Stephen Innes, managing partner at SPI Asset Management, said in a commentary.
Longer-term Treasury yields have in turn been rising rapidly, with the 10-year Treasury yield topping 5% last month to reach its highest level since 2007.Fed Chair Jerome Powell said the central bank is unsure that its main interest rate is high enough to ensure high inflation will move down to its 2% target. That kept alive the possibility of more hikes by the Fed. He also said the Fed is not considering cuts to interest rates, which can act like steroids for financial markets. headtopics.com
The jump in yields has already brought the average 30-year fixed mortgage rate to nearly 8%, for example, “and those higher costs are going to weigh on economic activity to the extent this tightening persists.”“It takes time, we know that, and you can’t rush it,” Powell said.
On Wall Street, the S&P 500 rose 1.1% to 4,237.86 and the Dow Jones Industrial Average gained 0.7% to 33,274.58. The Nasdaq composite jumped 1.6% to 13,061.47. Big Tech stocks were winners Wednesday, along with other high-growth stocks typically seen as the biggest beneficiaries of easier interest rates. headtopics.com