 Dollar strengthened broadly overnight, underpinned by the solid rebound in US Treasury yields, while stock markets closed mixed. Stalling disinflation progress, as indicated by the latest CPI data, reinforced the likelihood that Fed will only adopt a gradual approach to lowering interest rates in the future. The aggressive 50bps rate cut back in September is clearly a one-off action that's not going to be repeated. Additionally, market participants are increasingly concerned about the inflationary impact of the incoming administration's fiscal and trade policies. Furthermore, structural changes in the US economy suggest that the terminal rate of the current easing cycle could be higher than previously anticipated. These factors may keep the Fed's easing hands tied in 2025, limiting the scope for significant policy easing.... |
