The global dollar remains at its highs waiting for the Fed to slow down its easing

He global dollar and bond yields remain near multi-month highs on Monday on expectations that the Federal Reserve slow down your pace flexibility, while global stocks mostly fall and investors await the release of earnings results. Nvidia later in the week.

The new administration of the president-elect of the United States, donald trumpis starting to take shape with nominations for health and defense positions last week, but two key positions for financial markets, that of Secretary of the Treasury and Trade Representativehave not yet been covered.

Trump’s choice of the vaccine skeptic Robert F. Kennedy Jr. for the main health post in USA has already caused fallout in the health sector, with pharmaceutical companies falling at the end of last week.

“It should be a quieter week, as the recent incessant wave of US macroeconomic and political news is theoretically slowing, and the main story on this front is the possible political appointments for the new Trump administration,” said Jim Reid, director of global economics and thematic research at Deutsche Bank.

Trump’s plans to cut taxes and raise tariffs are expected to spur inflation and reduce the Fed’s scope to ease interest rates.

Bonds remain high while waiting for the Fed

Meanwhile, the returns of the United States Treasury bonds held near multi-month highs on Monday, boosted by bets of less aggressive rate cuts by the Fed in the future. The benchmark 10-year yield was steady at 4.4256%, while the two-year yield was at 4.2823%.

Futures imply a 60% chance that the Fed will ease monetary policy by a quarter point in December and only have 75 basis points of cuts priced in through the end of 2025, compared with more than 100 a few weeks ago.

This came after comments by the president of the Federal Reserve, Jerome Powellfrom last week, which indicated that borrowing costs could remain high for longer.

“With the changes underway in the policy of immigration, politics tariff and politics fiscal, “Fed officials would still tread more carefully given the inflationary impact these policies pose,” said Thierry Wizman, global rates and currencies strategist at Macquarie.

The change in perspectives on rates and the inflation in the United States lifted the dollar to a one-year high last week. The dollar index, which measures the currency against a basket of six others, was steady at 106.69, just below last week’s peak of 107.07.

Global stock markets down

The stock markets Global currencies fell slightly as investors assessed the latest developments with Trump’s top team and the outlook for monetary policy.

MSCI’s broadest gauge of global shares was down 0.1%, while the pan-European index was down 0.2%. The main indices of Frankfurt, London and Paris They fell between 0.1% and rose 0.2%.

The futures of Nasdaq They gained 0.5%, after the index fell for five consecutive days last week. S&P 500 futures rose 0.1% ahead of Nvidia’s third-quarter results on Wednesday, where analysts expect the AI ​​chip leader to post a rise in revenue.

The actions of Nvidia They are up almost 200% this year, and their significant weighting in the S&P 500 is partially responsible for the index’s rise to all-time highs this year. But its dizzying multi-year track record has also raised the bar for earnings outperformance, and a stumble could fuel fears that the market’s hopes for AI have surpassed reality.

In Asia, the index MSCI Broader Asia-Pacific shares outside Japan rose 0.2%. Japan’s Nikkei 225 index fell 1.1%, dragged down by the decline in technology stocks. The governor of Bank of JapanKazuo Ueda, reiterated on Monday that the central bank will continue to raise rates if economic and price developments are in line with its forecasts, but did not mention whether an increase could occur in December.

However, he later said at a news conference that keeping inflation-adjusted real interest rates low for too long could cause excessive inflation and force the BOJ to raise interest rates quickly.