"Markets Rally as Fed Holds Steady and Rate Cut Bets Rise"

Asian equity markets, as well as U.S. and European stock futures, rallied as investors grew confident that the next move in U.S. interest rates would be a cut rather than an increase. Federal Reserve Chair Jerome Powell hinted at a more balanced approach to risks and inflation, reducing the likelihood of a rate hike in December. The probability of a rate cut by June 2024 increased to almost 70%, and futures now imply around 85 basis points of easing for the entire year. However, if the Fed does nothing, policy will effectively tighten into next year, potentially increasing the risk of recession. The drop in Treasury yields pulled down the U.S. dollar, while the improvement in risk sentiment boosted the Australian and New Zealand dollars. The Bank of England is expected to hold rates, and the focus now turns to Apple's earnings report and the upcoming payrolls report.