Global Equity and Bond Markets Hail Positive Price Movements

 

On Monday (November 25th), the stock market and government bonds rose as traders welcomed the selection of Scott Bessent as Treasury Secretary, viewing it as a prudent choice that will inject more stability into the U.S. economy and financial markets.

From a market performance perspective, Asian stock indices rose by approximately 1%, with Japan, South Korea, and Australia leading the way. U.S. stock index futures also saw a slight increase.

 

The Chinese stock market's trajectory diverged from other markets in the Asia-Pacific region, reflecting investors' ongoing disappointment with China's lack of more robust fiscal measures to stimulate the economy. At this time, after the People's Bank of China cut interest rates in September, policy loan rates have remained unchanged, indicating that authorities are patient in increasing monetary stimulus.

The yield on the 10-year U.S. Treasury note fell by 5 basis points to 4.35%. The dollar depreciated, while Bitcoin recovered from its weekend decline.

 

As the head of the macro hedge fund Key Square Group, Bessent stated he would support tariff and tax cut plans. However, investors believe he will prioritize economic and market stability over political objectives. Bessent's nomination has alleviated market concerns about protectionist policies, which could accelerate inflation, intensify trade tensions, and increase market volatility.

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Traders' bets on the "trade" are gradually weakening, a pattern that includes a rising dollar and increasing Bitcoin, mainly due to market corrections in expectations of high interest rates caused by rising import costs and tax cuts.

 

"Compared to aggressively implementing significant policy changes, he is more inclined to take a gradual approach," said Brian Jacobsen, Chief Economist at Annex Wealth Management, on Bloomberg Television. The market may feel relieved as this nomination indicates that the government's governance model is "America First" rather than "America Alone."

In the foreign exchange market, the Bloomberg Dollar Index experienced its largest drop in over two weeks, with the yen leading the gains. Traders are betting that fiscal policies—including comprehensive trade tariffs and sustained economic growth—have driven the dollar's rise for eight consecutive weeks since last Friday.

 

After experiencing the largest weekly gain in nearly two months, commodities fell due to geopolitical risks in Ukraine and the Middle East, with investors being cautious.

Gold, after recording its largest increase in 20 months last week, began to decline and is now below $2,700, accelerating its drop to around $2,660, a significant decrease of nearly $60 from the day's high of $2,720.

 

On the evening of November 24th local time, Israel's public broadcasting company reported that Israel has essentially agreed to the draft of the U.S.-proposed Israel-Lebanon ceasefire agreement. Prime Minister Netanyahu is currently considering how to announce the draft to the public. The report also stated that the U.S. has assured Israel that it can take unilateral action if Hezbollah violates the ceasefire agreement.

Meanwhile, Axios, citing a U.S. official, reported that "a Lebanon ceasefire agreement is imminent, but there is still work to be done." Axios also quoted a senior Israeli official, stating that Israel's situation is moving towards signing a Lebanon ceasefire agreement.

 

This week, Asian traders will closely monitor Japan's inflation data, following last week's hints by Bank of Japan Governor Kazuo Ueda that the December policy meeting is underway. The Reserve Bank of New Zealand is expected to cut its benchmark interest rate on Wednesday.

Additionally, Europe will release a series of inflation and growth data. In the U.S., traders will pay attention to the Federal Reserve's November meeting minutes, consumer confidence index, and personal consumption expenditure data to assess the likelihood of rate cuts next year.