Asia wrap: When the spotlight dims on bessent , Focus shifts to a packed data docket
|Asian markets have opened the week on a robust note, buoyed by developments at Mar-a-Lago. The appointment of Scott Bessent as Treasury Secretary is seen as a market-friendly move, with investors interpreting it as a sign that President-elect Trump might adopt a more measured approach to tariffs and fiscal policy. Bessent's influence is expected to bring nuanced economic strategies to the forefront, potentially easing concerns over abrupt policy shifts.
Equities and Treasuries bounced, and the dollar took a gentle dip, all in response to the appointment, which for today is being heralded as a masterstroke, hopefully promising a new era of stability and sagacity in a Trump Whitehouse.
By tomorrow, the spotlight on Scott Bessent’s appointment will likely dim as market focus pivots to the forthcoming slew of U.S. economic data. The centrepiece is the release of personal income and spending for October, complemented by the latest PCE price updates. Analysts predict a 0.3% month-on-month uptick in core inflation, which continues to simmer above comfortable levels.
Yet, there's a palpable sense of market fatigue regarding these persistent inflation spikes. The Federal Reserve appears less driven to tackle this final stretch of inflation control.
Amidst this, the new administration's policy directions inject a layer of unpredictability that could significantly influence the economic trajectory. With this backdrop, the Fed is increasingly expected to press pause on rate cuts in one of its upcoming meetings—whether that will be in December or January is still up for grabs, with the forthcoming inflation data likely to tip the scales.
On Tuesday, the financial world's eyes will be riveted on the release of the November FOMC minutes, a document that traders will dissect for any hint of the Fed's take on the election results. While it’s too early for the Fed to pivot its policy based on speculative future events, these minutes might crack open the door to discussions about the economic tremors a renewed Trump-led trade war could unleash in 2025. Yet, true to the Fed’s signature style, anticipate a narrative steeped in cautious 'wait and see' rhetoric, holding off on any bold moves until the dust settles and clearer paths emerge.
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