Foreign investors are increasingly hedging their exposure to the dollar due to concerns about US President Donald Trump's policies, with Deutsche Bank reporting that hedged investments in US bonds and equities have surpassed unhedged holdings for the first time in four years. The trend has contributed to a more than 10% decline in the dollar this year, even as US stocks have surged, highlighting a shift in investor strategy to mitigate currency risk.

Japan's 20-year government bond auction saw its highest demand since 2020, easing investor concerns over political uncertainty and fiscal risks. The bid-to-cover ratio jumped to 4, well above the August sale, driving yields down 4 basis points to 2.63%. The result bolsters confidence ahead of key Fed and Bank of Japan policy meetings later this week.

The US has begun the formal review process for the United States-Mexico-Canada Agreement, inviting public comments over the next 45 days. The review will culminate in reports to Congress evaluating the deal's effectiveness and outlining possible changes or the US position on extending the agreement. The process is expected to be contentious, given the current trade climate and the looming 2026 mandatory joint review deadline.

Brazilian Finance Minister Fernando Haddad anticipates that interest rate cuts are likely in the coming months, highlighting increased optimism due to a more favorable currency environment. The central bank had previously halted its tightening cycle after raising the Selic rate to 15%, its highest in nearly twenty years.

The Federal Reserve is expected to cut interest rates by a quarter point Wednesday to support a weakening labor market, marking its first policy shift of the year after tariff-driven inflation concerns kept it on hold. Fresh projections due with the decision are expected to signal one or two more cuts this year, though dissent among policymakers looms. ""Every cut is more difficult than the previous cut unless the labor market shows signs of continued deterioration," said Aditya Bhave, senior US economist at Bank of America.

The UK and the US have unveiled a "Tech Prosperity Deal" during President Donald Trump's state visit, with Microsoft, Google, and other US firms pledging £31 billion in UK investments. The pact covers AI, quantum computing, and civil nuclear projects, and is aimed at boosting growth and research ties while positioning the UK as a top destination for global tech investment. Prime Minister Keir Starmer, under pressure to revive the UK economy, hailed the deal as transformative for both countries.

The Bloomberg Dollar Spot Index has dropped for a third consecutive day, reaching its lowest level since March 2022, as traders anticipate the Federal Reserve's decision on interest rates. The euro and yen have strengthened against the dollar, with the euro reaching a four-year high.

Law firm partners say a pro-growth shift by the UK Competition and Markets Authority is driving an increase in dealmaking, with more transactions being approved than in the past. The change has made the agency more attractive for mergers and acquisitions, and strong antitrust practices are helping law firms win more work, they say.

Institutional investors, including pension funds, hedge funds, and asset managers, are expected to strongly oppose US President Donald Trump's proposal to end quarterly earnings reports. Many rely on frequent disclosures to closely monitor company performance and manage risk. Investors argue that quarterly updates are essential for tracking developments and making informed decisions, especially during volatile periods.

Retail investors in Hong Kong are increasingly trading leveraged exchange-traded funds following a rule change that allows listings of amplified single-stock wagers. Trading activity in leveraged and inverse ETFs has surged, with the total value traded reaching $80 billion, a 60% increase from last year, but net flows have been muted, with investors pulling more than $284 million from these products.

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