The dollar slid and Treasuries held gains, extending their November rally on speculation the Federal Reserve is done with policy tightening and may start cutting interest rates next year.

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The US currency fell for a fifth day as it weakened against all its major peers, with the yen leading the gains. Stocks in Asia look poised for a mixed session, with increases in Sydney and losses in Tokyo, where the yen’s strength near a two-month high weighed on exporters.

Futures for Hong Kong pointed to a steady open, while contracts for US shares were little changed.

Fed swaps are anticipating over 100 basis points of rate cuts by the end of 2024 after Governor Christopher Waller said the bank is well positioned to push inflation to a 2% target. Billionaire investor Bill Ackman said the Fed could begin cutting interest rates as soon as the first quarter, sooner than markets expected.

“The latest round of dovish Fed comments, which open the door to rate cuts in 2024, follows cautious comments from Fed officials in early October, which we noted as the start of the pivot,” said Tony Sycamore, a market analyst at IG Australia Pty. “In my thirty years in markets, I have not seen a central bank come close to executing such a well-timed pivot, punctuated by a patch of softer inflation and labor market data.”

Two-year Treasury yields steadied after dropping 15 basis points to around 4.73% Tuesday while a Bloomberg gauge of the dollar fell to its lowest since August and is on track for its worst month in a year. The New Zealand dollar held gains ahead of a key policy decision.

In a speech entitled “Something Appears to Be Giving,” Governor Waller — one of the most-hawkish officials — said he’s “increasingly confident that policy is currently well positioned to slow the economy and get inflation back to 2%.” While acknowledging the many uncertainties, his colleague Michelle Bowman refrained from telegraphing an imminent hike.

Elsewhere, oil edged higher as focus turned to an OPEC+ meeting on Thursday. Gold extended gains to its highest level since May, also buoyed by hopes of a Fed policy shift.

On the economic front, US consumer confidence rose for the first time in four months in November, aided by more optimistic views about the outlook for the labor market. Home prices hit a fresh record high, according to seasonally adjusted data from S&P CoreLogic Case-Shiller.

The most-active investors in the Treasury market are as bullish as they’ve ever been, according to a weekly survey conducted by JPMorgan Chase & Co. since 1991.

JPMorgan’s Treasury client survey for the week ended Nov. 27 found that 78% of active clients were positioned long relative to their benchmark, up from 56% the previous week. None of them were positioned short for a second straight week, for a 78% net long position that was the biggest in the history of the survey. The remaining respondents were neutral.

Meantime, the recent sharp pullback in volatility as year-end approaches creates hedging opportunities given the cloudy outlook for equities, according to Goldman Sachs Group Inc. strategist Christian Mueller-Glissmann.

“After the recent equity rally, we believe there is an attractive entry point to hedge the risk of a retracement,” he noted. “Cross-asset volatility has continued to reset lower, supported by markets further embracing the ‘inverse’ Goldilocks backdrop in the US with faster-than-expected inflation normalization and growth remaining resilient.”

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