Asian equities could trade in a defensive mood after another negative session on Wall Street, with the US Treasuries curve steeping due to a sell-off on rates amid a post-FOMC reaction. The bond market was also hit with participants’ anticipation around Japanese dollar reserve sales after the FX intervention, in which the Ministry of Finance and the BoJ stepped into the FX market to buy JPY for USD.
On the geopolitical front, the use of nuclear weapons from Russia also brought some caution trading price action after the Russian Deputy Chair of the Security Council voiced those Russian weapons, including nuclear, can be used to defend territories in Russia. Equities traded down with a bid on the USD, and Oil was supported. For the session ahead, traders now look to Fed Chair Powell’s remarks, with all eyes to any other unscheduled Fed speakers post-FOMC. Traders will be looking for any pushback or support for the market’s hawkish reaction after the Wednesday meeting. With the forward rates climbing to new cycle highs further out, a terminal Fed Funds rate is now seen at 4.67% in May next year, which had been trading around 4.50% before the last FOMC decision.
