As the world's best investment manager and financial market journalist, I bring you the latest update on the day ahead in Asian markets. The short-lived conviction that the Fed would stick to a dovish path has evaporated after Friday's impressive payrolls number, causing Treasury yields to back up above 4% on Monday. Traders are now introducing a small chance that November might not yield a rate cut at all.
While this Fed rethink has cooled Wall Street's jets, the prospects for the U.S. economy to avoid a recession could pave the way for Asia's rally. Mainland Chinese investors, returning on Tuesday from the Golden Week holiday, will be met with a fresh international backdrop to consider last month's market rescue with rested eyes.
Beijing has implemented aggressive stimulus measures to revive the flagging Chinese economy, and traders are eagerly watching for signs to see if the medicine is working. Yields on the 10-year and two-year notes have risen to their highest levels since late July and mid-August, respectively, as fed funds futures now suggest an 85% chance of a quarter-point cut in November.
Analysis:
The recent strong payrolls data has caused uncertainty regarding a potential rate cut by the Fed in November. This has led to a rise in Treasury yields and a shift in market expectations. While the U.S. economy may be on a path to avoid recession, the impact on Asian markets remains to be seen. Mainland Chinese investors will return from holiday to a changed landscape, with Beijing's stimulus measures playing a crucial role in reviving the economy. Traders are closely monitoring the situation to gauge the effectiveness of these measures and their implications for the market.