-- Stocks in Asia rose after US equities touched fresh highs and bonds also rallied as traders brace for the latest monetary policy decision from the Federal Reserve.Real Estate Pain Is Showing Up in an Obscure Investment Product
Despite the Tuesday bond gains, traders have stepped up short bets in anticipation of a selloff ahead of the Fed’s monetary decision due later Wednesday. The Bloomberg dollar index climbed for a fourth day, strengthening against most major currencies. “If the rise in yields and the dollar can continue comes crucially down to whether the Fed validates the hawkish narrative or not,” said Win Thin and Elias Haddad at Brown Brothers Harriman. “If Jerome Powell can stick to the hawkish script, the message will remain consistent and market reaction will likely be limited. If he veers from the script and delivers a dovish tilt, then market reaction will likely be quite violent.
Since 2022, the Fed has been letting as much as $60 billion in Treasuries and as much as $35 billion in agency-backed mortgage debt mature each month and roll off its balance sheet, a process known as quantitative tightening. Investors should buy the dip in stocks in the case of pullbacks amid a backdrop of good economic growth and inflation normalization, according to Goldman Sachs Group Inc. strategists led by Christian Mueller-Glissmann.
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