US stock futures advanced along with Asian equities after a deal was reached on the weekend to avoid an American government shutdown. Traders are waiting to hear Federal Reserve Chief Jerome Powell’s remarks for any clues on how much further rates will need to rise.
“Financial markets were bracing for a shutdown, so there’s an element of relief, but it’s only a temporary lifting of one of the clouds hanging over the markets now,” said Yung-Yu Ma, chief investment officer at BMO Wealth Management. “Interest rates and Fed hawkishness remain the name of the game and the main driver of the markets over the next few weeks.”
“The higher-for-longer rates, the tighter fiscal policy going forward, the higher bond yields, at least in the short term, will all come to roost and impact the economy and cause a slowdown, a recession probably in the first half of 2024,” Vasu Menon, managing director of investment strategy at Oversea-Chinese Banking Corp., said on Bloomberg Television, referring to the US economy.