Markets across Asia slid on Friday as the Federal Reserve confirmed a second straight rate cut and halted its balance sheet runoff, triggering a rise in U.S. Treasury yields and sparking investor anxiety. The move, announced ahead of year-end, underscores a pivot toward policy stability amid weakening labor market data.
- Federal Reserve cut the federal funds rate by 25 basis points for the second consecutive meeting.
- Balance sheet runoff halted effective December 1, 2025.
- U.S. 10-year Treasury yield rose from 4.18% to 4.37%.
- SPX futures fell 0.8%, NDX futures dropped 1.1% in pre-market trading.
- USD/JPY climbed to 152.45, reflecting yen weakness.
- Asian equity indices: Nikkei down 1.8%, KOSPI down 1.5%.
Global equities in Asia extended losses Friday as the U.S. Federal Reserve’s latest policy decision sparked volatility. The Federal Open Market Committee (FOMC) delivered a 25-basis-point reduction in the federal funds rate, marking the second consecutive cut, and announced an immediate halt to the ongoing reduction of its balance sheet, effective December 1. The decision, while aligning with expectations of a dovish shift, surprised markets with its timing and signal of potential rate cuts beyond 2025. Bond yields responded sharply: the U.S. 10-year Treasury yield jumped from 4.18% to 4.37% by early Friday Asian trading, the highest level since late October. This rise reflects growing concerns over the Fed’s commitment to maintaining accommodative policy, especially as inflation remains sticky. The yield spike pressured equities, with the S&P 500 futures (SPX) down 0.8% and Nasdaq futures (NDX) declining by 1.1% in pre-market trading. In regional markets, Japan’s Nikkei 225 dropped 1.8%, while South Korea’s KOSPI fell 1.5%. The yen weakened further, with USD/JPY rising to 152.45 amid expectations of continued divergence in monetary policy between the U.S. and Japan. Financials and technology sectors—both sensitive to interest rate shifts—led losses, with major tech stocks in the S&P 500 down more than 1.3% on average. The Fed’s decision comes at a critical juncture, as central banks worldwide assess the balance between supporting growth and containing inflation. With the U.S. economy showing signs of softening in employment and consumer spending, the Fed’s stance may set the tone for global financial conditions into 2026.