Fed optimism in global markets

Stock markets started the week positively on Friday due to the US PPI data. The fall in US producer prices above expectations on Friday supported the Fed's expectation that it will start cutting interest rates in March, while Asia Pacific indices are rising on Fed optimism. In the swap market, market traders are pricing the possibility of a Fed rate cut in March as 80 percent. This rate was 62 percent last week. Despite the lack of a rate cut from China, the MSCI Asia Pacific index is rising for the third trading day on the possibility of early easing by the Fed. While Japanese indices rose by over 1 percent in the morning hours, the Chinese CSI 300 recorded a more limited increase of 0.2 percent. Baidu shares fell by 10 percent on news that artificial intelligence technology was being used by the Chinese military. The company denied these reports. US markets will be closed today due to the Martin Luther King Jr. Day holiday. The S&P 500 and Nasdaq 100 are slightly higher in the futures market. The Bloomberg Dollar Index is flat at 1,224 points. Brent crude oil started the week positively with a 0.2 percent increase and is finding buyers at $78.5 per barrel. “Inflation recovery may slow” According to Atlanta Fed President Raphael Bostic, who has a vote in Fed interest rate decisions this year, inflation recovery may slow even further in the coming period. Speaking to the Financial Times, Bostic stated that if they cut interest rates early, inflation could start to rise again. According to Bostic, making an early interest rate cut also carries the risk of inflation getting completely out of control. Stating that Fed members’ expectations regarding interest rate cuts are quite clear, Bostic said, “Markets think inflation will fall faster.” Bostic stated that they are closely monitoring the increased transportation costs resulting from the Houthi attacks on commercial ship passages in the Red Sea.