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(Bloomberg) — Stocks in Asia edged higher on Monday as traders prepared to navigate a heavy slate of central bank decisions this week, including one where the Federal Reserve is widely expected to cut interest rates.

MSCI Inc.’s gauge of Asian equities rose 0.2%, with technology being the biggest contributor to gains. US stock index futures were up slightly while a gauge of the dollar edged lower. Japan’s economy shrank in the three months through September, the government confirmed in a revised report on Monday, while signs emerged over the weekend that the nation’s relations with China were deteriorating.

With traders already having priced in a 25-basis point rate cut by the Federal Reserve this week, a lack of fresh catalysts has seen markets move in tight ranges in recent days. A gauge of global equities has continued to hover near an all-time high reached in October as investor caution over the durability of this year’s AI-driven rally persists.

“The FOMC meeting will be the headline risk event,” Chris Weston, head of research at Pepperstone Group, wrote in a note. “A 25 basis-point cut is fully priced and viewed as a done deal, but the real debate centers on what a ‘hawkish cut’ looks like and whether the statement and Powell’s press conference aligns to that well-subscribed outcome.”

Japan’s gross domestic product fell at an annualized pace of 2.3% in the third quarter, as revised figures showed business spending and housing investment came in weaker than preliminary figures. The contraction was deeper than the initial reading of a 1.8% fall, and was the first in six quarters.

The data added an element of complexity to the Bank of Japan’s upcoming policy decision next week, but likely won’t derail it from its gradual hiking path.

Meanwhile, central banks spanning Australia to Brazil and the Philippines to Turkey will be announcing rate decisions this week, just as renewed inflation pressures prompt a reassessment of 2026’s monetary outlook.

What Bloomberg’s Strategists Say…

“Global bonds are set to extend their retreat as revived cost pressures push central banks to become more hawkish. JGBs face another pair of nervy auctions with the BOJ priced to hike rates next week. Even the Fed’s expected rate cut is likely to be offset by a hawkish statement.”

—Garfield Reynolds, MLIV Asia Team Leader. Click here for the full analysis.

Defense Stocks

Beijing and Tokyo traded complaints against each other as their simmering diplomatic spat intensified over the weekend after Chinese fighter aircraft trained their fire-control radar systems on Japanese military jets for the first time.

Defense stocks in Japan and China rose on Monday.

China’s CSI 300 Index extended its gain to more than 1% after exports for November rose 5.9% in dollar terms, exceeding estimates and giving investors an insight into the health of the economy and the impact from modest US tariff relief.

Meanwhile, French President Emmanuel Macron warned that the European Union may be forced to take “strong measures” against China, including potential tariffs, if Beijing fails to address its widening trade imbalance with the bloc.

In commodities, silver wavered near a record and gold rose as China’s central bank added to its bullion reserves for a 13th straight month in November. Oil steadied as traders monitored India’s buying of Russian crude and Ukrainian attacks on its neighbor’s energy infrastructure.

‘Ripping Through’

On Friday, the S&P 500 Index rose 0.2% to inch closer to a record high as a dated reading of the Fed’s preferred inflation gauge met expectations. Treasuries declined, pushing the 10-year yield up four basis points to 4.14% and closing out their worst week since April, after conflicting economic data cast fresh uncertainty on the scale of potential Fed rate cuts next year.

Treasury yields may extend their rise, possibly toward 4.5%, on the back of an impending fiscal boost from President Donald Trump’s earlier spending bills, strong growth and “the broader reflationary momentum now ripping through global long-end bond yields,” Tony Sycamore, an analyst at IG Markets in Sydney, wrote in a note. “While we think this is likely more of a story for 2026, a rise of this magnitude could impact equities if it unfolds rapidly.”

Read: Bond Traders Defy Fed and Spark Heated Debate on Wall Street

This week’s auctions of three-, 10- and 30-year government debt are slated to begin Monday, a day earlier than usual to avoid coinciding with the Dec. 10 Fed announcements. Australia is set to reopen a bond line maturing in 2054 just as the 10-year yield hits the highest since Nov. 2023.

The US continues to clear the data backlog with the delayed JOLTS reports scheduled for release. Weekly jobless claims and the employment cost index are also due. Besides the Fed rate decision, economists expect the Bank of Canada, Swiss National Bank and Reserve Bank of Australia will leave their respective policy rates on hold this week.

While the Fed is likely to cut on Wednesday, “the rate path for 2026 is more uncertain as members balance lingering price pressures from tariffs, a cooling labor market, the likely pick-up in economic activity in the coming months,” Barclays strategists including Andrea Kiguel wrote in a note to clients. “We think 2026 is likely to be a year of prolonged holds, though markets could try to add hike premiums if inflation momentum persists.”

Meanwhile, Wall Street research veteran Ed Yardeni is recommending going underweight the Magnificent Seven megacap technology stocks versus the rest of the S&P 500, expecting a shift in earnings growth ahead.

Corporate News

US President Donald Trump raised potential antitrust concerns around Netflix Inc.’s planned $72 billion acquisition of Warner Bros. Discovery Inc., noting that the market share of the combined entity may pose problems. US lawmakers released annual defense authorization legislation that backs almost $901 billion in discretionary spending for national security programs and seeks to restrict American investments in sensitive Chinese industries. Brookfield Asset Management Ltd. and Singapore’s GIC Pte agreed to a binding deal with National Storage REIT to buy the Sydney-listed firm for around A$4 billion ($2.7 billion). Qatar Airways Group named Hamad Ali Al‑Khater as its new group chief executive officer in a surprise shakeup, succeeding Badr Mohammed Al-Meer after just two years in the post. An outage that took down markets operated by CME Group Inc. for more than 10 hours at the end of last week was caused by human error at a data center owned by CyrusOne. Indian regulators held IndiGo’s chief executive accountable for the severe disruptions that have roiled the country’s biggest airline in recent days, faulting the company for “significant lapses in planning, oversight, and resource management.” Eli Lilly & Co., Pfizer Inc. and Johnson & Johnson secured spots on China’s first innovative drug catalog, opening a new market channel and boosting sales prospects for costly, cutting-edge treatments. Some of the main moves in markets:

Stocks

S&P 500 futures rose 0.1% as of 12:20 p.m. Tokyo time Japan’s Topix rose 0.4% Australia’s S&P/ASX 200 fell 0.2% Hong Kong’s Hang Seng fell 0.8% The Shanghai Composite rose 0.7% Currencies

The Bloomberg Dollar Spot Index fell 0.1% The euro rose 0.1% to $1.1654 The Japanese yen rose 0.2% to 155.01 per dollar The offshore yuan was little changed at 7.0670 per dollar The Australian dollar was little changed at $0.6646 Cryptocurrencies

Bitcoin rose 1.2% to $91,303.81 Ether rose 0.8% to $3,112.06 Bonds

The yield on 10-year Treasuries was little changed at 4.13% Japan’s 10-year yield was unchanged at 1.950% Australia’s 10-year yield advanced two basis points to 4.71% Commodities

West Texas Intermediate crude rose 0.2% to $60.19 a barrel Spot gold rose 0.3% to $4,211.67 an ounce This story was produced with the assistance of Bloomberg Automation.

©2025 Bloomberg L.P.

US stocks climb as inflation data strengthens rate cut outlook

United States (US) stock markets ended the week on a positive note, supported by soft inflation data that reinforced expectations of a rate cut at this week’s Federal Open Market Committee (FOMC) meeting. For the week, the Nasdaq 100 finished 1% higher, the S&P 500 rose by 0.31%, and the Dow Jones gained 238 points (+0.50%).

Ahead of Thursday’s FOMC meeting, the core Personal Consumption Expenditures (PCE) price index – the Federal Reserve’s (Fed) preferred gauge of underlying inflation – rose a tame 0.2% month-on-month (MoM) in September and 2.8% year-on-year (YoY), in line with forecasts. Yet despite the benign print, US Treasury yields rose 4 basis points (bp) across the curve, taking their lead from Canadian bond yields, which gained after a hotter-than-expected jobs report.

US 10-year yields show strongest weekly rise since April

This resulted in US 10-year yields finishing the week 12 bp higher, marking their strongest weekly increase since April, to be eyeing the neckline of a potential inverted head-and-shoulders pattern at 4.17 – 4.19%. A clear breakout above this level would open the way for US 10-year yields to rise towards 4.50%.

While this is likely more of a story for 2026, a rise of this magnitude could impact equities if it unfolds rapidly. Potential catalysts for rising US bond yields include: 

• The impending fiscal boost from the ‘One Big Beautiful Bill’
• The Fed cutting rates into resilient growth
• The broader reflationary momentum now rippling through global long-end bond yields.

Key data release before Thursday’s decision

Looking ahead, the only notable data release before Thursday’s FOMC decision is Wednesday morning’s October Job Openings and Labor Turnover Survey (JOLTS) report, useful context, but already somewhat stale.

FOMC interest rate decision

Date: Thursday, 11 December at 6.00am AEDT

At the last FOMC meeting in October, the Fed cut rates by 25 bp into a target range of 3.75% – 4.00%.

It was the central bank’s second consecutive rate reduction and was approved by a 10 – 2 vote. Fed Governor Stephen Miran voted against the decision in favour of lowering rates by 50 bp, while Kansas City Fed President Jeff Schmid dissented in favour of holding rates steady.

Fed Chair Jerome Powell told reporters at the post-meeting news conference that a December cut was not a ‘foregone conclusion’. The minutes of the meeting released on 19 November showed disagreement about the path forward, with the Board divided over whether a stalling labour market or stubborn inflation were bigger economic threats.

The hawkish minutes resulted in the odds of a 25 bp rate cut at this week’s meeting falling to about 30%. However, since then, dovish Fed commentary and soft tier-two labour market data now sees the interest rates market pricing in an 87% chance of a 25 bp rate cut to 3.50% – 3.75% at this week’s meeting.

The commentary will likely have a hawkish element, with Fed Chair Powell noting that the bar for further cuts is higher, and he will likely point out the views of participants who opposed a cut.

Looking ahead, the rates market is pricing in another two full 25 bp rate cuts in 2026, with a 50% probability of a third 25 bp rate cut in 2026.

Federal funds rate chart