"In the short term, risk appetite has strengthened thanks to recent progress in trade relations between the U.S. and Asian economies. President Donald Trump's visit to South Korea, and his expected meeting with Chinese President Xi Jinping during his Asia tour, have helped ease concerns about potential tariff escalations. Markets are now hopeful that such a bilateral meeting could lay the groundwork for a large-scale investment package or a new trade agreement, thereby reducing the risk of prolonged trade frictions."
"On the monetary front, the Fed is widely expected to hold interest rates steady in its upcoming meeting. However, investors are now focusing on Chair Jerome Powell's tone and the broader FOMC statement for clues about the policy trajectory ahead. With the quantitative tightening (QT) program nearing its final phase, markets are increasingly anticipating a shift toward a neutral or even easing stance sometime in 2026. Still, the 10-year U.S. Treasury yield hovering around 4.3% signals that financial conditions remain relatively tight."
All four major US indices closed at record highs, with gains led by the Nasdaq and Nasdaq-100. Optimism stems from easing trade tensions during President Trump's Asia tour and hopes for a productive meeting with China that could enable large investment or trade agreements. Capital rotated into growth-sensitive sectors including industrials, technology, and financials. The Federal Reserve is expected to hold rates, while markets await Chair Powell's tone and FOMC guidance. Quantitative tightening is nearing its final phase, and anticipation of policy neutrality or easing in 2026 contrasts with a 10-year Treasury yield near 4.3%, keeping financial conditions relatively tight.
Read at London Business News | Londonlovesbusiness.com
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