Global bond rally fuels broad risk appetite for country assets

The global bond rally has provided a broad increase in risk appetite from stocks to emerging market assets in November, while Asian stocks recorded their best monthly performance since January.

The Hong Kong Hang Seng has moved into positive territory, recovering from losses that were effective in early hours due to weak Chinese PMI data.

Global stocks are also heading toward their strongest monthly performance since November 2020, as expectations grow that the Fed will begin interest rate cuts next year.

JPMorgan, which has risen nearly 9 percent since the beginning of the month and for which other institutions are predicting new records, has projected that the S&P 500 index will fall by approximately 8 percent to 4,200 by the end of 2024.

US index futures are slightly higher. The US 2-year Treasury yield fell 9 basis points on Wednesday, while the 10-year Treasury yield dropped 7 basis points. The Bloomberg Dollar Index is down 3.4 percent on a monthly basis.

FED POLICY IS IN A ‘GOOD PLACE’ ACCORDING TO MEMBERS

Two members who will have voting rights on Fed interest rate decisions in 2024 signaled that there is no urgency to raise rates.

Cleveland Fed President Loretta Mester, who has been among the officials calling for higher interest rates in general this year, signaled that she would support the Fed keeping rates steady at its meeting next month, stating that monetary policy is in a good position for the central bank to be agile and respond appropriately to the evolving outlook.

Atlanta Fed President Raphael Bostic, one of the first policymakers to suggest that interest rates have reached their peak, said he is increasingly confident that inflation is definitely on a downward path.

Richmond Fed President Thomas Barkin, who said he is not yet convinced on this matter, also argued that the central bank should keep the option of raising interest rates on the table if inflation remains stubbornly high, but did not use language indicating he supports a rate hike next month.

Speaking at the CNBC CFO Council Summit on Wednesday, Barkin said, “If inflation comes down naturally and smoothly, that would be great. But if inflation were to pick back up, you would want to have the option to do more on rates.”

News Source: 12punto