- Asian equities rose, building on a late rally in which US stocks caught bids into the close amid holiday-thinned trading. The dollar fell after three days of gains, and Treasury yields fell slightly.
- Following the dovish stance of the new Bank of Japan governor, Kazuo Ueda, who signalled that any significant changes to monetary policy may be unlikely for the time being, Japanese shares led the early advance. The yen has stabilised after falling by more than 1% after Ueda's speech on Monday.
- South Korea's KOSPI rose as the central bank kept interest rates unchanged, as economists predicted. Following a long weekend, the Hong Kong and Australian markets showed strong gains.
- Shanghai stocks fluctuated, with Chinese inflation data in the spotlight. Consumer prices were lower than expected, and deflation in factory-gate prices was in line with expectations, implying that policymakers will likely keep the stimulus option open.
- The yield on two-year Treasuries fell about four basis points after rising on Monday, as traders priced in another quarter-point Fed hike in May. Swap contracts have been repriced to reflect approximately 80% odds of a quarter-point hike on May 3, up from 75% on Friday. After the Fed set its policy band at 4.75%-5% on March 22, the chances of a May rate hike almost vanished amid a drop in bank shares following the failure of several institutions.
