Asian markets show mixed signals as investors react to declining Treasury yields and stable US inflation data

The Asian markets presented a mixed picture on Thursday as investors were pleasantly surprised by a decline in Treasury yields and stable US inflation data, despite negative cues from Wall Street. Business in New York was relatively subdued ahead of the Thanksgiving holiday in the US, after weeks of bustling activity following Donald Trump's election. This gave Asian traders a pause to process recent developments as the president-elect forms an ambitious cabinet that apparently intends to take a tougher stance on global trade. Trump has already announced tariffs against China, Canada, and Mexico. Data released from Washington on Wednesday showed that the Federal Reserve's preferred inflation indicator – the Personal Consumption Expenditures Index – rose to 2.3 percent year-over-year in October. This meets forecasts and is slightly above the Fed's long-term target of two percent. Although the Fed seems to have inflation under control and the labor market is cooling, investors have begun to reduce their expectations about the number of rate cuts as they weigh the effects of Trump's plans for tax cuts and tariffs. Currently, the probability that the central bank will lower rates by another 25 basis points in December is about two-thirds. Nevertheless, all three major Wall Street indices closed in the red, with the Dow and S&P 500 retreating from their record highs as investors held back before the holiday season. Treasury yields fell, weighing on the dollar on Wednesday, although the greenback edged higher in Asian trading. Stock markets were mixed in early trading, with Tokyo, Sydney, and Singapore advancing, while Wellington, Taipei, Manila, and Jakarta declined. Seoul stagnated, even though South Korea's central bank cut rates for the second consecutive time. Hong Kong and Shanghai weakened as traders focused on Beijing amid speculation that authorities might announce new stimulus measures at a key meeting expected next month. However, analysts noted that hopes ahead of previous gatherings have often been dashed by disappointing measures. "China's economy remains unbalanced as a solid export base for goods production is offset by the ongoing weakness of the real estate market and tepid consumer behavior," noted Steven Cochrane, chief economist for Asia-Pacific at Moody's Analytics. He further stated that "consumer confidence, especially regarding expectations for the job market, remains shaken.