Hawkish Fed remarks will probably prevent early Wall Street trading from being affected by expectations of a change in China’s Covid policy.
Tuesday’s trading in U.S. market futures was uneven, the dollar dipped versus a basket of currencies, and Treasury yields leveled out as investors waited for China’s tough Covid health regulations to relax after the country’s rare weekend protests.
However, security is still tight in major Chinese cities, and remarks from senior officials in Beijing, including those from the National Disease Control and Prevention Administration, indicate that there is a better chance of fine-tuning regulations regarding quarantine, vaccination, and domestic travel than a complete overhaul.
Still, as overall confidence improved and news of a fresh push for the vaccination of senior residents started to surface, stocks in China were traded decisively higher overnight, supporting a jump of 2.38% in the MSCI ex-Japan index for the entire region.
The actions assisted in lowering the benchmark 10-year U.S. Treasury note yields to 3.70% in early New York trading and pushing the benchmark U.S. dollar index 0.32% down versus a basket of its global counterparts to 106.342. In European trade at midday, the Stoxx 600 increased by 0.31%, while the FTSE 100 of Great Britain increased by 0.77% in London.
However, a string of remarks made by Federal Reserve officials yesterday are likely to temper any gains from the Asian session. Each of them suggested that interest rates will likely stay high for almost the entire year as the central bank remains committed to containing the fastest inflation in four decades.