Stronger Dollar and Higher Yields Weigh on Sentiment

The U.S. dollar advanced to a near two-week high as a surge in oil prices contributed to a rise in Treasury yields. This has subsequently increased market bets on further interest rate hikes from the Federal Reserve, creating potential headwinds for non-yielding assets.

Markets Await Central Bank Decisions

Investor focus is centered on upcoming monetary policy meetings for both the U.S. Federal Reserve and the Bank of Japan, leading to cautious trading in Asian markets. Adding to the uncertainty, Japan's government plans to move forward with tax cuts without detailing the funding, which could maintain fiscal concerns ahead of the BOJ's decision.

China's Economy Shows Imbalanced Recovery

Recent economic reports from China indicated an uneven recovery, with factory output accelerating while retail sales and consumer spending growth slowed. Despite these highlighted economic imbalances, some global multi-asset funds have reported a significant increase in assets driven by strong investment inflows related to China.