On Tuesday, December 9, markets remained cautious ahead of the Federal Reserve's interest rate decision, with global equities showing mixed performance while US Treasury yields climbed to fresh highs.
US stock futures rose modestly, while European and Asia-Pacific markets were mixed. In bond markets, US Treasury yields extended gains, hitting multi-month highs, with Australia’s three-year bond yield also reaching its highest level since November last year. The US dollar index held steady, the Australian dollar strengthened, while the yen weakened. Gold dipped, silver rose, and oil stabilized after its steepest single-day drop in nearly three weeks. Cryptocurrencies declined.
Frederic Neumann, Chief Asia Economist at HSBC, noted:
"Investors are on hold, awaiting the Fed’s decision. Given lingering uncertainty over the Fed’s 2026 policy path, markets will scrutinize the FOMC statement and projections closely. Hence, the cautious tone from overnight US trading has carried over into Asia today."
Key market movements:
- US stock futures edged up, with S&P 500 futures gaining 0.1%, Nasdaq 100 futures rising 0.1%, and Dow Jones futures up 0.05%. - Premarket, Nvidia rose over 2%, while Intel climbed more than 1%. - Europe’s Stoxx 50 opened 0.03% higher, France’s CAC 40 rose 0.04%, Germany’s DAX gained 0.09%, while the UK’s FTSE 100 fell 0.23%. - Japan’s Nikkei 225 closed up 0.14% at 50,655.10, while South Korea’s KOSPI dropped 0.3%. - The 10-year US Treasury yield rose 1 basis point to 4.17%; Germany’s 10-year yield climbed 6 bps to 2.86%; the UK’s 10-year yield added 5 bps to 4.53%. - The US dollar index was flat; USD/JPY rose 0.2% to 156.28, hitting its highest since November 28. - Spot gold fell 0.3% to $4,178.12/oz; silver rose 0.24% to $58.27/oz; WTI crude slipped 0.1% to $58.81/barrel. - Bitcoin dropped 1.6% to $89,908.85, while Ethereum fell 1.4% to $3,104.61.
Market focus remains on the Fed’s rate decision this week, with US stock futures rising and Treasury yields climbing. The 10-year US yield hit 4.182% on Tuesday, while the 30-year yield neared 4.82%, both marking highs since September.
Traders currently price in a roughly 90% chance of a 25-basis-point cut on Wednesday, though analysts expect a hawkish tone, signaling a potential pause in easing next year. Swap markets now project a terminal rate of 3.2%, the highest since July.
Expectations for a Bank of Japan rate hike continue building. Governor Kazuo Ueda told parliament that the central bank "will raise rates if economic conditions permit," though he declined to comment on timing.
As a result, demand at Japan’s five-year bond auction weakened, with investors cautious ahead of policy clarity. Finance Minister Shunichi Suzuki reiterated close market monitoring. The 10-year JGB yield hovered near 2%, within its highest range since 2006. The yen remained weak despite tightening expectations.
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