Equities opened higher in Sydney, while dipping in Tokyo and Seoul. US equity futures were little changed after the S&P 500 rose for a seventh day to notch its 52nd record this year. A Bloomberg gauge of the dollar slipped 0.1%, paring some of its strength seen on Tuesday that pressured the Mexican peso and Chinese yuan, among others.
Trump’s tariff plan seemed to gather further momentum on Wednesday, with the president-elect’s transition team said to be readying an announcement of Jamieson Greer as US Trade Representative. A longtime protégé of Robert Lighthizer, the selection highlights the key role tariffs will play in the new administration’s economic agenda.
China “is likely to respond cautiously at first to Trump’s threats, until it gets a better sense of the balance between confrontation and deal-making in his second term,” said Neil Thomas, a fellow for Chinese politics at the Asia Society Policy Institute’s Center for China Analysis.
Middle East tensions abated somewhat as President Joe Biden said Israel reached a cease-fire deal with the Lebanese militant group Hezbollah after weeks of talks mediated by the US. While anticipation of the announcement sent oil lower on Tuesday, crude was little changed early Wednesday after an industry report showed a drop in US stockpiles and traders looked to an OPEC meeting this weekend.
In Asia, key events include Australia’s inflation and a central bank decision in New Zealand, where a rate cut of 50 basis points is expected.
While US stocks gained on Tuesday, the bond market response was mild following its second-biggest advance this year. Federal Reserve officials indicated support for a careful approach to rate cuts, according to minutes from their latest policy meeting. US 10-year yields advanced three basis points to 4.31%.
That comes as a bearish tone takes hold in the market for interest-rate options, suggesting that traders are bracing for Treasury yields to surge anew in the coming weeks. The wagers are a reminder that even though yields have surrendered the brunt of their post-election advance, investors are well aware of the potential for the so-called Trump trade to gain traction again.
