Asian stocks open lower with stronger Fed rate hike possibility

As a result, several interest-sensitive sectors in the equity markets have witnessed massive declines.

In a speech on Monday, Rosengren said it was now reasonable to ask whether the current level of near-zero rates was necessary given he expects the economy to continue expanding at above its potential rate of around 2 percent.

The third, however-the participation rate-was the one major job indicator that failed to signal robustness. The suspected hike comes on the heels of Friday’s report that United States companies added 271,000 jobs in October. This is the highest figure recorded this year. Additionally, the increase in average hourly earnings on a yearly basis is the highest in six years.

“And in the first half of the 2000s, the economy was propelled by irrational exuberance over housing, sending house prices spiraling far beyond fundamentals and leading to massive overbuilding”, Williams said.

The quarter percent hike was a consensus reached by the Fed after witnessing a string job growth in August. Investors now seem extremely confident in the Fed rate hike slated next month. This jobs report may be just the kind of impetus the central bank was looking for.

Dollar Bull Run to End? A rising dollar will impact the USA economy, but we should not overlook the fact the U.S.is not an export driven economy as exports represent only about 14 percent of the total economy. The yield on the 10-year Treasury note rose to 2.34 percent.

The fundamentals of the US economy will justify breaking the parity level between euro and dollar.

The greenback changed hands at 123.15 yen early Tuesday afternoon in Tokyo, compared with 123.19 yen Monday afternoon in NY.

What we now continually see is the yield gap widening between the U.S. and German bonds, as the Dollar begins to stretch.

The five-year break even swap differential between the dollar and the euro moving distinctively in favour of a stronger dollar.

Such a feeling emanates from the events of October. However, with the recent development around the matter and the strong economic data that supports Federal Reserve’s targets, markets now look forward to a hike in the upcoming meeting in December. This led to a 0.4% decline in the dollar on the 8th of last month.

Of course, if the dollar rallies from here, that’ll be a shot in the arm for currency-hedged ETFs. This is certainly a risk given that growth in the emerging world continues to slow, that pockets of financial excesses there have yet to be sufficiently addressed and that broker-dealers continue to seek to reduce their exposure to risk, lowering market liquidity.

The Thai baht was up 0.03 percent, and the Singapore dollar traded 0.05 percent higher.

Germany’s DAX index fell 1.6 percent, France’s CAC-40 index lost 1.5 percent and the U.K.’s FTSE 100 lost 1 percent. While the increase this month is driven more by monetary-policy divergence it still has implications for global banks. Additionally, interest rates are a key input to the valuation models analysts and investors use to estimate “fair” share prices.

But now that a hike appeared imminent, markets were actually quite sanguine, brokers Capital Economics noted.