Dollar Rally and Bond Yields Rise as Fed Initiates Large Rate Cut

The U.S. Federal Reserve began its easing cycle with a 50 basis points rate cut, leading to a dollar rebound and increased bond yields. Asian stocks were mostly up following the decision. While the S&P 500 hit a record high, the Fed emphasized the next moves would be data-driven.

The dollar bounced, long-dated bond yields rose, and Asian stocks mostly climbed following the U.S. Federal Reserve's initiation of its easing cycle with a substantial rate cut. The Fed's balanced outlook aims to sustain economic momentum.

The S&P 500 hit a record high overnight before closing lower. Futures increased by 0.6% in Asia, with Nasdaq futures up by 0.9%. Japan's Nikkei surged 2%, and Australian shares also reached a record high. The Fed cut its benchmark policy rate by 50 basis points to 4.75-5%, aligning with market expectations.

The dollar initially fell to a two-and-a-half-year low against the sterling but rebounded sharply. U.S. ten-year Treasury yields increased by eight basis points to 3.719%, while gold briefly hit a record high near $2,600 an ounce before stabilizing at $2,559.

(With inputs from agencies.)