While the dollar was boosted by the largest weekly increase in longer-dated Treasury yields in a year due to declining U.S. rate cut prospects for 2025, Asian markets fell on Friday as investors were disappointed by the lack of information on Chinese stimulus. Shortly after trading began, U.S. futures were little higher while European stocks were neutral. Data revealed that the British economy shrank in October which caused the pound to decline.
After the Central Economic Work Conference failed to provide information on additional stimulus measures, Hong Kong’s Hang Seng (.HSI) and China’s blue-chip stocks (.CSI300) both saw losses of over 2%. Beijing’s top officials promised to raise debt and stimulate spending but they were unable to raise Chinese stocks.
As Donald Trump’s comeback to office draws near, authorities are bracing for greater trade disputes with the United States which is lowering growth prospects and contributing to Chinese bond yields falling 18 basis points which is their biggest weekly decline since April 2018. Bond yields fluctuate in opposition to price changes.
The appeal of comparatively higher U.S. interest rates has been enhanced by a week of rate cuts from Switzerland, Canada and the European Central Bank which has also strengthened the dollar.
On Friday, the dollar index which is up 1% this week compared to its competitors was up 0.15% at 107.12,which is about its highest level in over two weeks. This week, 30 year yields increased by 22 basis points, the largest weekly increase in almost a year while the 10 year benchmark bond yield increased by 17 basis points.
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The Indonesian central bank had to constantly step in to support the currency after the rupiah fell to a four month low on Friday. To help the rupee which is close to hitting record lows, the Indian central bank began selling dollars through state banks.
After declining somewhat the day before, Europe’s STOXX 600 (.STOXX) which opens as a new tab equities index is down 0.1% on Friday. Germany’s DAX (.GDAXI) opened with a 0.36 percent increase while Britain’s FTSE 100 (.FTSE) increased 0.14%. The U.S. S&P 500’s futures increased by 0.28%. The index (.SPX) which opens a new tab finished marginally down on Thursday after hitting a record high on December 6 due to excitement about the second Trump administration which is expected to prioritize tax cuts and deregulation.
