Markets Overview

  • ASX SPI 200 futures down 0.3% to 8,525.00
  • Dow Average down 0.1% to 42,171.66
  • Aussie up 0.5% to 0.6509 per US$
  • US 10-year yield little changed at 4.3909%
  • Australia 3-year bond yield fell 0.9 bps to 3.36%
  • Australia 10-year bond yield fell 0.5 bps to 4.25%
  • Gold spot down 0.6% to $3,369.06
  • Brent futures down 0.3% to $76.24/bbl

Economic Events

  • 10:30: (AU) Australia to Sell A$2 Billion 84-Day Bills
  • 10:30: (AU) Australia to Sell A$1 Billion 126-Day Bills
  • 11:00: (AU) Australia to Sell A$100 Million 2.5% 2030 Inflation-Linked…
  • 11:30: (AU) May Employment Change, est. 21,200, prior 89,000
  • 11:30: (AU) May Unemployment Rate, est. 4.1%, prior 4.1%
  • 11:30: (AU) May Participation Rate, est. 67.1%, prior 67.1%
  • 11:30: (AU) May Full Time Employment Change, prior 59,500
  • 11:30: (AU) May Part Time Employment Change, prior 29,500

 

Asian equities were primed to open lower Thursday after Federal Reserve Chair Jerome Powell said he expects inflation to pickup meaningfully in the coming months.

The Fed left rates unchanged in its Wednesday meeting and indicated it still sees two further cuts this year. Yet Powell said tariff-driven economic uncertainty and inflation risk continued to complicate the central bank’s bid to ease policy. The dollar strengthened while Treasuries and US stocks were little changed Wednesday. US markets are closed Thursday for a holiday.

The Fed left rates unchanged in its Wednesday meeting and indicated it still sees two further cuts this year. Yet Powell said tariff-driven economic uncertainty and inflation risk continued to complicate the central bank’s bid to ease policy. The dollar strengthened while Treasuries and US stocks were little changed Wednesday. US markets are closed Thursday for a holiday.

Equity index futures for Japanese, Australian and Hong Kong benchmarks fell early Thursday in Asia. The muted moves did little to support havens like gold, the yen or the Swiss franc, which all traded in tight ranges Wednesday.

Oil was little changed as President Donald Trump said he would hold another meeting to discuss the conflict between Israel and Iran. Asked on Wednesday if he was moving closer to bombing Iran, Trump said “I may do it. I may not do it.”

The broadly stable moves indicated a lack of direction across global markets as investors awaited further details on the global economy, US inflation and the prospect of heightened tension in the Middle East.

Powell noted that increases in tariffs are likely to boost prices, while adding that the effects on inflation could be more persistent. He also declined to say if he’ll stay on after his term ends.

“Ultimately, the cost of the tariff has to be paid and some of it will fall on the end consumer,” Powell said. “We know that because that’s what businesses say, that’s what the data say from the past. We know that’s coming and we just want to see a little bit of that before we make judgments prematurely,” he added.

The Fed’s decision to hold rates steady – coupled with Powell’s latest warning on tariffs – underscores the delicate balance facing policymakers guiding the economy toward continued expansion. While officials continued to pencil in two rate cuts in 2025, they downgraded their estimates for growth this year while lifting forecasts for unemployment and inflation.

“Powell played it safe,” said Haris Khurshid, chief investment officer at Karobaar Capital in Chicago. “They’re sticking to two cuts for now, but clearly rattled by tariffs. No urgency to move. It’s a tough spot: growth slowing, inflation lingering, and geopolitical risk heating up.”

While the median expectation for two rate cuts in 2025 didn’t change, a number of officials lowered their projections. Seven officials now foresee no rate cuts this year, compared with four in March. Two others pointed to one cut this year.

“They are clearly in wait-and-see mode,” said Chris Zaccarelli at Northlight Asset Management. “They are sitting on their hands, waiting to see if tariffs increase inflation or the jobs market starts to falter, and whichever part of their dual mandate is impacted first will likely guide whichever direction they take.”

In Asia, data set for release includes Swift payments for China, employment in Australia, and rate decisions in Taiwan and the Philippines. Later Thursday the central banks of Switzerland, Norway, Turkey and the UK will also hand down rate decisions.