Central banks sustained a hawkish tilt into quarter-end, with the Fed having raised its target range 25bp to 3.75%-4.00% in mid-September and the dot-plot now signalling at least one further hike, while the ECB lifted its deposit rate 25bp to 2.50% citing energy-driven HICP forecasts peaking near 3.6% in Q4 2026, and the Bank of England held at 3.75% with a hawkish three-way split warning of upside inflation risks. Geopolitics remained a key overlay, with Middle East tensions centred on US-Iran developments and Strait of Hormuz supply risks keeping oil elevated and amplifying the global risk-off impulse that pushed long-dated US Treasury yields higher — the 30-year reaching 5.59% at Wednesday's close. Cooler-than-expected August PCE data (headline +3.4% y/y versus 3.7% forecast; core also softer) offered modest relief, trimming October Fed-hike odds on CME FedWatch to roughly 37-40% from around 50-70% prior, which helped the Nasdaq eke out a 0.24% gain even as the Dow shed 0.86%. The VIX edged up 1.87% to 16.34, reflecting lingering unease rather than outright panic, with the yield curve steepening — the 2s10s spread widening as short-end yields eased 3bp while the 10-year added 2bp to 5.26%.
For Asia-Pacific markets opening Thursday, the cross-asset read is cautiously mixed: the softer PCE print reduces immediate Fed pressure and supports risk appetite at the margin, but structurally elevated yields and a higher-for-longer rate environment continue to weigh on rate-sensitive sectors including REITs and long-duration growth names. The AUD slipped 0.59% to 0.6948 against the USD, reflecting both the broad dollar tone and residual uncertainty following the RBA's own 25bp hike to 4.60% — a 15-year high — which adds domestic mortgage stress as a headwind for consumer-facing names. Copper's 1.34% overnight gain and gold holding near USD 4,185/oz provide a constructive signal for ASX resources, though iron ore's modest 0.20% slip to USD 96.73/t and ongoing China demand uncertainty temper enthusiasm for the bulks complex. The ASX VIX fell 5.13% to 10.92, consistent with yesterday's 0.34% gain on the ASX 200 to 8,709.3, suggesting local sentiment is relatively contained even as global macro crosscurrents remain live.