Global bonds strengthened and oil prices continued their decline, with Brent crude falling below $79 per barrel, reaching its lowest level in over three months. This drop, totaling roughly 15% over four sessions, is attributed to expectations of increased global supply following a US-Iran agreement to reopen the Strait of Hormuz, easing inflation concerns.
Investors are closely watching the Federal Reserve's first policy meeting under Chair Kevin Warsh, though expectations are for rates to remain unchanged. The focus will be on the policy statement, economic projections, and any signals regarding future easing. While the Bank of Japan recently hiked rates, it is an outlier, as most developed-market policymakers are expected to hold steady. Meanwhile, China's central bank, the PBoC, indicated a potential shift in its monetary policy framework towards emphasizing overnight rates and possibly increasing overnight reverse repo operations.
Equity markets showed a mixed performance. S&P 500 futures increased by 0.3% following a tech-led selloff on Wall Street, which saw the Nasdaq 100 drop nearly 2%. Asian equities, however, gained 0.3% for the fourth consecutive session. Treasury yields hovered near one-month lows, with Australian and Japanese 10-year yields decreasing by 5 basis points.
