The gains followed strengthening expectations for Fed easing, with money markets pricing in a roughly 80% chance of a quarter-point rate cut next month and three more by the end of 2026. A week ago, traders expected just three cuts in total.
A four-day rally in government bonds came to a halt on Wednesday, with 10-year yields at 4%, after new US labor market data came in stronger than expected. An index of the dollar extended its losses to a third day, while gold advanced. As sentiment improved, Bitcoin climbed above $90,000 for the first time in nearly a week, clawing its way back into the ground after a month-long sell-off.
The cross-asset moves signal cautious optimism in global markets after concerns about technology valuations undermined US stocks earlier this month. Sentiment has since improved after dovish comments from Fed officials revived expectations that the central bank will cut borrowing costs at its meeting next month.
“Uncertainty around the event is decreasing,” Kyle Rodda, a senior analyst at Capital.com, wrote in a note to clients. The publication of the US central bank’s Beige Book showed that employment in the US fell slightly and prices rose moderately, according to the survey of regional business contacts. Spending fell further, except among more expensive consumers. Initial unemployment claims also fell slightly, exceeding expectations for a modest increase. The US data “reinforced the idea that there are cross-flows and mixed performance in the real economy,” said Ian Lyngen of BMO Capital Markets. There is nothing in the reports that will stop the Fed from cutting 25 basis points on December 10, he said.
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