Asian Stocks Edge Up as US Inflation Eases Rate Cut Worries

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Asian Stocks,US Inflation,Federal Reserve

Asian stocks saw modest gains on Tuesday, despite a shortened trading week, as concerns about aggressive rate hikes by the Federal Reserve eased following the release of benign US inflation data. The greenback held near a two-year high, boosted by elevated US Treasury yields. Chinese stocks extended gains on news of increased government support to bolster the country's struggling economy, including the issuance of a record 3 trillion yuan in special treasury bonds. However, investors remain cautious about China's outlook, citing the real estate crisis and potential trade tensions with the US.

Emerging Markets - Thai baht falls as much 0.5% but Asian stocks, FX advance after benign US inflation eases rate cut worries

Two sources told Reuters that Chinese authorities have agreed to issue 3 trillion yuan worth of special treasury bonds next year, which would be the highest on record. "China faces significant challenges entering 2025. The ongoing real estate crisis has shattered consumer confidence while a potential trade war with the United States could trigger the worst growth slowdown in decades," said Ronald Temple, chief market strategist at Lazard.

Markets are now pricing in just about 35 basis points of easing for 2025, which has in turn sent U.S. Treasury yields surging and the dollar to new highs. Ahead of Trump's return to the White House in January, global central banks have urged caution over their rate paths due to uncertainty on how his planned tariffs, lower taxes and immigration curbs might affect policy.

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