Markets in 3 Minutes: Markets Dovishly Await Fed Amid Hassett

Group 1 - The Bank of Japan (BOJ) is expected to raise interest rates on December 18th or 19th, contingent on no significant events occurring beforehand [1][2] - There is a likelihood of an increase in Japanese Government Bond (JGB) yields due to the anticipated rate hike, making JGBs less attractive compared to other developed market bonds [3][4] - Concerns exist regarding the fiscal capacity in Japan deteriorating faster than in other regions, which could limit the ceiling on policy rates and contribute to unattractive yields [4] Group 2 - The Federal Reserve (Fed) is viewed as having a more significant impact on global markets compared to the BOJ, with current pricing indicating a dovish stance [7][10] - The Fed is expected to announce a 25 basis point rate increase, with a terminal rate projected at 3%, making it challenging to lower rates without substantial economic decline [8][9] - Upcoming Fed meetings are anticipated to provide new projections and insights, especially with a new Fed chair expected next year, indicating a potential shift in consensus [8][10]