The MSCI Asia ex-Japan index is on track for a third weekly loss in four. But it looks like a very slender decline, which will flip to a second straight weekly gain if the index rises 0.2% or more on Friday.
This is likely, after the rebound on Wall Street and in global stocks on Thursday.
The move was partly a natural bounce back from the surprise slump in the last hour of trading the previous day, and partly thanks to figures that showed U.S. inflation is back down to the Fed’s target.
The final reading of third quarter U.S. growth and inflation showed that growth was revised down to a 4.9% annualized rate from 5.2%, but annual rate of core PCE inflation was revised down to 2.0% from 2.3%.
Traders quickly moved to price in a more dovish Fed outlook – 155 basis points of easing next year is now expected, the first cut will be in March, with a 15% probability that the easing cycle could even start in January.
Music to the ears of the ‘soft landing’ crew, a band of believers that appears to be gaining in numbers by the day.
