A relative calm in the wave of global bond selling and anticipation of the US Federal Reserve meeting

The global selling wave in the bond market stopped today, Tuesday, while stock markets moved in a narrow range, with traders’ attention turning to the upcoming Federal Reserve meeting, and the repercussions of the United States allowing “Nvidia” to… By exporting its second-best chips to China.

The Australian Central Bank shares the spotlight with its American counterpart this week, as it kept interest rates unchanged as expected, today, Tuesday, but more clearly ruled out any additional easing of monetary policy, warning that the next step may be to raise interest if inflation pressures prove, and this pushed the Australian dollar to trade near its highest level in about 3 months. The Bank of Canada and the Swiss National Bank are expected to keep interest rates unchanged when they meet, on Wednesday and Thursday respectively, while statements by European Central Bank Board member Isabel Schnabel caused strong waves in the markets, even though the European Central Bank will not decide its policy before next week. Schnabel said that the next step for interest rates in the euro zone is likely to be higher, even if it is not imminent, warning that keeping interest rates unchanged for a long period may lead to implicit monetary easing, according to what was reported by “Bloomberg” agency.

These statements led short- and long-term German government bond yields to achieve their largest daily rise in several months during Monday’s trading, and also pushed US Treasury bond yields to rise as well.

However, the atmosphere was calmer in the markets today, Tuesday, as the yield on standard 10-year German bonds fell by two basis points to 2.84%, near the highest level in 9 months, while the yield on 10-year US Treasury bonds fell by a similar amount to 4.15%.

A state of relative calm also prevailed in the stock markets, as European stocks and US stock futures rose slightly during the day, while Asian stocks fell.

Concerns about the financial situation in Japan continue to push Japanese government bond yields to rise, with global extensions to that, which makes the scene more sensitive before the US Federal Reserve meeting that concludes its work on Wednesday, as traders made it clear that a 25 basis point reduction has become almost a pricing decision, but there is a lot of Investors are waiting for it. Erica Camilleri, senior global macroeconomic analyst at Manulife, said: Investment Management: “Between the possibilities of an opposing vote, the tone of Federal Reserve Chairman Jerome Powell, and the summary of economic expectations, I see that there are many ways in which the markets may be surprised.”

She added that these indicators will also reveal whether the next Federal Reserve Chairman will take over an institution that is conservative toward further rate cuts, or is open to meeting President Donald Trump’s desires for a more accommodating policy.

The White House economic advisor and one of the most prominent candidates to head the Federal Reserve, Kevin, said. Hassett said the Fed should continue to cut interest rates, which opens questions about the nature of the Fed’s work in the medium term. Camilleri asked: “What will happen when we look to 2027 and 2028?” Will this be a Federal Reserve that raises interest rates if we see a new acceleration in growth? Or will he have a tendency to ease, keeping interest rates unchanged even with the return of accelerating growth and inflation data? Investors also tried to absorb the repercussions of US President Donald Trump’s announcement that Washington would allow NVIDIA to… By exporting its advanced H200 processors, its second-best artificial intelligence chips, to China, imposing a 25% fee on those sales. Nvidia shares rose By about 2% in pre-opening trading, while shares of Chinese technology companies declined on the mainland and in Hong Kong, where the Hang Seng Technology Stock Index lost about 2%.

In the currency market, a degree of stability also prevailed, as the euro recorded $1.1649, with little change as the rise in European yields balanced their American counterparts, while the pound sterling rose by 0.22% to $1.3347, and the yen stabilized at 156.1 against the dollar after it had weakened immediately following a strong earthquake that struck Japan. In commodity markets, oil prices stabilized after falling by 2% in the previous session, with traders closely following the peace talks aimed at ending Russia’s war in Ukraine. Brent crude futures contracts fell by 0.2% to $62.3 per barrel, while US West Texas Intermediate crude reached $58.69 per barrel, down 0.3%.

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