Positions taken in the options markets indicated that expectations for the Fed’s rate cuts this year decreased. Morgan Stanley also expects a 25 basis point rate hike from the Fed in July.
In global markets, forecasts about the Fed and the effects of China’s yuan fixing step are being watched. Chinese Premier Li’s statement that he expects stronger growth in the second quarter also supported the markets.
The onshore yuan gained 0.5 percent against the dollar after the Bank of China’s (PBOC) pegged the yuan above expectations.
Purchases in technology stocks traded in Hong Kong generally pushed up Asian indices. On the first trading day of the week, the US stock markets, which fell on the resurgence of concerns that the Fed’s rate hikes could put the US economy into recession, recovered somewhat in futures this morning.
The US 2-year Treasury yield is also trading down 6 basis points.