- The unexpected fall in inflation supported speculations that the Federal Reserve's aggressive run of rate hikes is coming to an end, and as a result, Asian stocks and currencies rose. Treasury bonds continued to climb.
- MSCI Inc.'s Asia Pacific Index increased by almost 2% as all markets saw gains. Following the largest increase since April in the S&P 500, futures for US stocks also increased. The won from South Korea led gains in Asian currencies. The offshore yuan reached its strongest level since August.
- Traders are currently preparing for what may be a significant change in the nature of the investing world. Fed swaps show that there is virtually no chance of another raise, with the market pricing in a 50 basis-point rate reduction by July. Although the recent report on declining inflation was welcomed by Fed officials, they noted that more work needs to be done before inflation hits the bank's 2% target.
- According to Pooja Malik, partner and head of portfolio management at Nipun Capital, "the fact that the US Fed seems to be done with rates and inflation is behind us for now is definitely a positive for all risky assets" on television. "Nevertheless, the next 12 to 18 months could see volatility in the situation."
- The Chinese central bank's move to retain the rate on one-year policy loans while pumping the most money into the banking sector since 2016 in an effort to spur development further bolstered sentiment. According to the most recent economic data, retail sales in China exceeded forecasts, while the decline in real estate investment continued.
