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In the bond markets, 10-year US Treasury yields dropped below 4.2% for the first time since December 10, signaling a more dovish Fed rate path.
US Personal Income and Outlays Report Sends Mixed Signals
On February 28, the crucial US Personal Income and Outlays Report took center stage amid shifting sentiment toward the Fed rate path. Key takeaways included:
- Personal spending fell 0.2% month-on-month in January after increasing by 0.8% in December.
- Personal income increased by 0.9% month-on-month in January after rising 0.4% in December.
- The Core PCE Price Index increased by 2.6% year-on-year in January, down from 2.8% in December.
The softer inflation reading and fall in spending countered the pickup in personal income, raising expectations of an H1 2025 Fed policy move. Friday’s US data and market moves set the tone for the Asian session on Monday, March 3.
China Private Sector PMI Data Signals Manufacturing Sector Rebound
China’s private sector PMI data, released on March 1 and March 3, drew investor interest. Manufacturing sector data proved crucial in calming market jitters ahead of Tuesday’s US tariff measures.
However, the upswing in manufacturing activity could stem from a rush to fulfill orders ahead of potential US tariffs rather than reflecting sustainable demand. Last week, President Trump reaffirmed plans for 10% tariffs on Chinese imports, effective March 4.
Meanwhile, investors remained hopeful of fresh stimulus measure to support China’s economy. On Sunday, March 2, Beijing pledged to continue offering support. CN Wire reported:
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