(Bloomberg) — Stocks and government bonds advanced, with traders welcoming Donald Trump’s choice of Scott Bessent as Treasury secretary as a measured choice that would inject more stability into the U.S. economy and financial markets.
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Stock benchmarks rose across Asia in early Monday trading, with markets from Australia to Japan and Hong Kong posting gains. US futures also traded higher. Meanwhile, the yield on ten-year government bonds fell by four basis points to 4.36%. The dollar fell as Bitcoin recovered from a weekend decline.
Bessent, who runs macro hedge fund Key Square Group, has indicated he will support Trump’s tariff and tax cut plans, but investors expect him to prioritize economic and market stability over political point scoring. The nomination has allayed concerns about the incoming president’s protectionist policies, which threatened to fuel inflation, worsen trade tensions and increase market volatility.
Elements of the so-called Trump Trade, characterized by a rising dollar and rising Bitcoin, are cooling as traders scale back bets on higher interest rates that could result from pricier imports and lower taxes.
“He’s bringing this sense of almost gradualism to the government, rather than taking a big bang approach to making big policy changes,” Brian Jacobsen, chief economist at Annex Wealth Management, said on Bloomberg TV. Markets may be relieved that the choice signals “an ‘America First’ type administration, but not an ‘America Exclusively’ type administration,” he said.
In currency markets, the dollar fell against its major peers, with the Australian dollar and Swedish krona posting the biggest gains. The dollar had risen for eight straight weeks as traders factored in Trump’s fiscal policies, including sweeping trade tariffs and continued economic growth.
U.S. stocks rose on Friday, with the S&P 500 gaining 0.4%, as beneficiaries of the new administration’s looser regulation and business-friendly stance increased.
Japan, US data
Oil held steady after its biggest weekly gain in almost two months as geopolitical risks in Ukraine and the Middle East kept investors on edge. Gold fell after last week’s biggest jump in 20 months.
This week, traders in Asia will be keeping a close eye on Japanese inflation data after Bank of Japan Governor Kazuo Ueda indicated last week that the December policy meeting is live. The Reserve Bank of New Zealand is expected to cut its policy rate on Wednesday.
Elsewhere, a series of inflation and growth figures are on the way in Europe. Traders will closely analyze the minutes of the November Federal Reserve meeting, consumer confidence and personal consumption expenditure data to help assess the prospects for rate cuts next year.
“Equity bulls will want to see a healthy rebound in consumer data, combined with a less-than-consensus reading on PCE inflation,” said Chris Weston, head of research at Pepperstone Group in Melbourne. “With US swaps now implying a 36% chance of a 25 basis point cut by the Fed on December 18, weaker US data would push the price for a 25 basis point cut back above 50%, which should support equity risk and should generate headwinds. for the US dollar.”
Main events this week:
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Singapore CPI, Monday
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BOE Deputy Governor Clare Lombardelli and rate setter Swati Dhingra will speak Monday
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ECB chief economist Philip Lane and board member Gabriel Makhlouf will speak on Monday
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Riksbank Deputy Governor Anna Seim speaks on Tuesday
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US FOMC minutes, new home sales, US Conference Board consumer confidence, Tuesday
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Bank of Canada Deputy Governor Rhys Mendes speaks Tuesday
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Chinese industrial gains, Wednesday
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New Zealand interest rate decision, Wednesday
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US PCE, initial unemployment claims, GDP, durable goods, Wednesday
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Bank of Australia Governor Michelle Bullock will speak on Thursday
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South Korea interest rate decision on Thursday
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Economic confidence in the eurozone, consumer confidence, Thursday
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Unemployment in Japan, CPI in Tokyo, industrial production, retail sales, Friday
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Eurozone CPI, Friday
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The Bank of England will publish a financial stability review and policy committee minutes on Friday
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Canada’s GDP, Friday
Some of the major moves in the markets:
Stocks
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S&P 500 futures rose 0.4% as of 9:05 a.m. Tokyo time
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Hang Seng futures were little changed
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Japan’s Topix rose 0.9%
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Australia’s S&P/ASX 200 rose 0.6%
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Euro Stoxx 50 futures rose 0.6%
Currencies
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The Bloomberg Dollar Spot Index fell 0.5%
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The euro rose 0.6% to $1.0477
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The Japanese yen rose 0.5% to 154.06 per dollar
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The offshore yuan rose 0.2% to 7.2424 per dollar
Cryptocurrencies
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Bitcoin rose 1% to $97,994.61
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Ether rose 0.3% to $3,356.63
Bonds
Raw materials
This story was produced with the help of Bloomberg Automation.
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