Stocks in Asia jumped to track Wall Street’s rally after an unexpected inflation slowdown bolstered bets that the Federal Reserve’s aggressive hiking cycle is over. Treasury yields and the dollar steadied after sliding in the previous session.

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Benchmark equity indexes across Japan, Australia and South Korea all advanced more than 1% at the open. Futures for US stocks edged higher after the S&P 500 climbed nearly 2% on Tuesday, the most since April.

Traders are now gearing up for what may be a fundamental shift in the investment landscape. Fed swaps indicate the odds of another hike have fallen to almost zero — with the market pricing in a 50 basis-point rate cut by July. Fed officials welcomed the latest data showing receding inflation, while adding that there’s still a way to go before it reaches the central bank’s 2% target.

“The fact that the US Fed seems to be done with rates and inflation is behind us for now is definitely a positive for all risky assets,” Pooja Malik, partner and head of portfolio management at Nipun Capital, said on Bloomberg Television. “However, the situation could stay volatile in the next 12 to 18 months.”

In Asia, China’s monthly economic data and the central bank’s liquidity operations will offer cues on the health of the world’s second-largest economy. The meeting between Chinese President Xi Jinping and his US counterpart Joe Biden is also closely watched for potential thawing of tensions. Tencent Holdings Ltd. reports earnings later in the day.

The five-year Treasury yield was little changed after plunging more than 20 basis points on Tuesday. The dollar was also steady after falling 1.2%, its biggest drop in a year.

The yen extended its weakness on report that Japanese economy shrank more than estimated in the third quarter. Most emerging Asian currencies strengthened against the greenback, led by South Korea’s won.

Equities have rallied in November on bets the Fed is done with rate hikes, with the S&P 500 up more than 7% in the span — and heading toward its best month since October 2022. Tesla Inc. led gains in megacaps on Tuesday and Nvidia Corp. rallied for a 10th straight session.

“The last of investors not convinced the Fed is done are likely ‘throwing in the towel’,” said Bryce Doty at Sit Fixed Income Advisors. “The next Fed action is more likely to be a cut next summer than another rate increase.”

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