Zforex
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Market Volatility and Central Bank Actions Amid Rising Bond Yields
On Wednesday, Asia-Pacific markets experienced widespread weakness, with Korean and Japanese stocks both declining by over 2% following a 16-year high in the U.S. 10-year Treasury yield. The Japanese yen strengthened against the U.S. dollar, briefly reaching 150 overnight. When asked about potential intervention to support the yen, Japan's Finance Minister Shunichi Suzuki declined to comment but mentioned Japan's readiness to respond to significant currency movements.
Meanwhile, the Reserve Bank of New Zealand decided to keep its key interest rate at 5.5%. Despite stronger-than-expected GDP growth in the June quarter, the bank noted a subdued growth outlook for the country. New Zealand's GDP rose by 3.2% compared to the same period last year.
In the US, job openings increased to 9.61 million in August, up from less than 9 million the previous month, according to the Bureau of Labor Statistics. This report led swaps traders to raise their bets on the Federal Reserve raising rates in December to over a 50% probability.
Atlanta Fed President Raphael Bostic, who is not voting this year, emphasized the need to keep rates elevated for an extended period. He projected a single rate cut in 2024, likely towards the end of the year. These comments followed a series of hawkish statements from other Federal Reserve policymakers.
The global bond selloff persisted, with investors adapting to a new era of higher-for-longer interest rates. Yields continued to rise, with the 10-year Treasury yield reaching a fresh 16-year peak, and the benchmark 10-year Japanese government bond yield remained at a 10-year high. These developments contributed to a risk-averse and unsettled European session, as indicated by futures pointing to a lower market opening.
On Wednesday, Asia-Pacific markets experienced widespread weakness, with Korean and Japanese stocks both declining by over 2% following a 16-year high in the U.S. 10-year Treasury yield. The Japanese yen strengthened against the U.S. dollar, briefly reaching 150 overnight. When asked about potential intervention to support the yen, Japan's Finance Minister Shunichi Suzuki declined to comment but mentioned Japan's readiness to respond to significant currency movements.
Meanwhile, the Reserve Bank of New Zealand decided to keep its key interest rate at 5.5%. Despite stronger-than-expected GDP growth in the June quarter, the bank noted a subdued growth outlook for the country. New Zealand's GDP rose by 3.2% compared to the same period last year.
In the US, job openings increased to 9.61 million in August, up from less than 9 million the previous month, according to the Bureau of Labor Statistics. This report led swaps traders to raise their bets on the Federal Reserve raising rates in December to over a 50% probability.
Atlanta Fed President Raphael Bostic, who is not voting this year, emphasized the need to keep rates elevated for an extended period. He projected a single rate cut in 2024, likely towards the end of the year. These comments followed a series of hawkish statements from other Federal Reserve policymakers.
The global bond selloff persisted, with investors adapting to a new era of higher-for-longer interest rates. Yields continued to rise, with the 10-year Treasury yield reaching a fresh 16-year peak, and the benchmark 10-year Japanese government bond yield remained at a 10-year high. These developments contributed to a risk-averse and unsettled European session, as indicated by futures pointing to a lower market opening.