Alarm bells ringing! CPI, the Fed's dot plot two “nuclear bombs” attacked, Asian investors can not sleep well

U.S. data move global nerves, the Asian markets are on guard

With the U.S. is about to release the latest inflation data and the much-anticipated Federal Reserve “dot plot”, from Tokyo to Sydney investors are planning, this double impact will be how to shake everything from the stock market to the bond market and currency markets. These events have the potential to upend markets as they anticipate that officials are more likely to make adjustments to the closely watched quarterly interest rate forecasts, also known as the dot plot.

Traders on high alert as markets expect volatility

Over the past year, market expectations for the Fed's interest rate moves have ebbed and flowed, with swap traders sharply cutting their bets on the number of Fed rate cuts from more than six at the start of 2024 down to closer to one. This led to a sell-off in U.S. Treasuries and a rally in the U.S. dollar, while pressuring Asian currencies such as the Japanese yen.

While Asia is also facing a number of challenges, such as post-election volatility in India, interest rate decisions by a number of central banks, including Japan, and depreciation pressures on Southeast Asian currencies, it is undeniable that U.S. monetary policy remains the most watched event by traders around the world.

“Cash is king”, investors seek safe-haven assets

Motonari Sakai, chief manager of foreign exchange and financial products trading at Mitsubishi UFJ Trust and Banking in Tokyo, said, “I don't have a dinner date, I won't drink at home, but quietly watch the release of the U.S. CPI. Then, I'll probably stay up at 3 a.m. waiting for the Fed's decision."

Emerging market experts are also on high alert.Sakshi Gupta, chief economist at HDFC Bank, said, “This meeting is very important, especially for the rupee. It could trigger the rupee into a new trading range."

Faced with an uncertain market environment, investors have sought safe-haven assets. city Index Inc. favors gold and silver; Shoki Omori, chief strategist at Mizuho Securities, said “cash is king” and said he will closely monitor the yen's movement.

Some investors remain cautiously optimistic and make tactical adjustments

Not all investors are pessimistic about the market outlook. BNP Paribas Asset Management's money manager Wei Li maintained a positive position in the U.S., Japan and emerging Asian equities, and said it “implemented some tactical adjustments and shifted to shorter-dated bonds”.

All in all, the release of U.S. CPI data and the Fed's “dot plot” will have a significant impact on global markets, and Asian markets will not be left alone. Investors need to pay close attention to the relevant developments and make corresponding investment adjustments according to their own risk appetite.