Markets somewhat positive on bets about Chinese stimulus

“You have economic numbers that are satisfactory… so people feel for the time being at least the impact on economic activity from the trade war may not be very substantial,” he added.

Those factors helped MSCI’s index of Asia-Pacific shares outside Japan rise 0.5 percent, while a pan-European equity index opened flat. Japan’s Nikkei touched its highest since late-January, while futures signalled a firmer opening on Wall Street.

World shares stayed near flat following a weaker close in New York, as investors kept a close watch on bond yields in the US and Germany. Ten-year borrowing costs in both countries have inched to multi-month highs, with the first interest rate rise by the European Central Bank now expected in September 2019, two months earlier than had been priced recently.

US 10-year treasury yields rose to as high as 3.113% on Tuesday, near their seven-year peak of 3.128% hit on May 18.

Fed funds rates futures implied traders are fully pricing in a rate hike on Wednesday, plus an 85% chance of another rise in December. That expectation was cemented after data showing US consumer confidence hit an 18-year high.

“The focus will be on whether the Fed will indicate its tightening is coming to an end. The Fed may not do so today but I expect markets will soon start looking to that scenario,” said Akira Takei, bond fund manager at Asset Management One.

The Fed’s past policy statements have shown that policy makers see 2.9%, about 100 basis points above the current levels, as an appropriate level in the longer run.

That means the Fed could hit that level by the end of 2019 if, as expected, it hikes on Wednesday, again in December and then twice more in 2019.

Takei noted signs that higher rates were already starting to hurt the US economy, for instance through rising consumer loan delinquencies. He added the dollar’s softness could be an early sign of growing focus over an end to the US tightening cycle.