Super Central Bank Week Begins: Fed Rate-Hike Probability Nears 90% as Decisions in the U.S., Japan, U.K. and Taiwan Set to Drive Global Fund Flows

The Federal Reserve, Bank of Japan, Bank of England and Taiwan's central bank will announce interest-rate decisions around the same time this week. Against the backdrop of a larger-than-expected rise in the core index of U.S. August CPI, the probability of a 0.25 percentage-point Fed rate hike has increased, making the first rate hike in three years increasingly likely. The Bank of Japan is expected to raise rates to 1.25%, bringing them to their highest level in 30 years.

Taiwan's stock market fell sharply last week, accompanied by substantial net selling by foreign investors. The fact that TSMC's ex-rights date will coincide with the Fed's decision is expected to add to market volatility, while attention is also focused on the Taiwan central bank's rate decision. Goldman Sachs said it believes that higher interest rates will be a headwind for equity markets but will not bring the long-term bull market to an end.

Movements in crude oil prices and U.S. Treasuries are the market's focus. WTI and Brent have continued to rise, while long-term U.S. Treasury yields have moved higher amid increasing uncertainty in the oil market, and the Treasury has indicated that it plans to expand its purchases of long-term bonds. Gold prices are facing downward pressure in a rising-rate environment, but fiscal deficits and the supply of long-term bonds are expected to provide support.

The key areas to watch going forward include policy signals from the Federal Reserve, Bank of Japan and Bank of England, developments in the Taiwan market, price movements in crude oil and gold, and U.S. Treasury yields. Depending on the statements and new economic data released by each country this week, the direction of fund flows will be a key focus for markets.