An Asian equity benchmark was set to snap a four-day winning streak as major indexes traded lower. South Korea’s Kospi Index fell over 2% after jumping by the most since 2020 on Monday following a renewed ban on short-selling. Contracts for US stocks slipped.

Traders are now predicting the Fed will lean against the recent easing in financial conditions by saying it will keep its options open on policy. Minneapolis Fed President Neel Kashkari said it’s too soon to declare victory over inflation, despite positive signs that price pressures are easing, and a host of Fed officials — including chair Jerome Powell — are due to speak over the next few days. 

Attention in Asia is also turning to Australia’s central bank which is forecast to end a four-meeting pause by raising interest rates as broader economic resilience suggests a further clampdown is needed to cool prices. The Aussie weakened against most of its G10 peers.

Treasuries steadied after yields rose across the curve on Monday. Ten-year yields jumped eight basis points as sentiment was dented by a heavy slate of corporate debt sales and traders readied for a series of auctions beginning on Tuesday. The dollar edged higher.

“We’re in a trading range probably for the next month or so until we get clear indications on what inflation’s going to really do, core inflation, and what the Fed’s going to do,” Max Wasserman, founder and senior portfolio manager at Miramar Capital, told Bloomberg Television. “We’ll find out either way though.”

Swaps are pricing in more than 100 basis points of rate cuts by the Fed by the end of 2024 from an expected peak rate of 5.37%. On Monday, investors also waded through the Senior Loan Officer Opinion Survey which showed tighter standards and weaker demand persist at US banks.

Meanwhile, China is due to release key trade data that will provide clues on whether the world’s second-biggest economy is emerging from its post-pandemic torpor. Zhang Qingsong, deputy governor of the People’s Bank of China, said at a financial summit in Hong Kong that the country has well-designed economic policy programs. 

Some investors are keeping a close eye on the S&P 500, with the 4,355 level marking a 50% retracement from the peak-to-trough decline from its July highs to October lows. The S&P 500 currently sits at 4,365.98. 

If it holds above that, the 4,400 level, where the index hovered during its mid-October highs, is the next number to watch, according to Keith Lerner, co-chief investment officer at Truist Advisory Services. “To reverse this downtrend, the S&P 500 still needs to break above 4,400,” said Lerner, whose firm is overweight US stocks.

Elsewhere, oil edged lower as an uncertain demand outlook and fresh doubts on the end of Fed’s tightening outweighed Saudi Arabia and Russia’s extension of supply cuts.