Stocks and bonds in Asia traded lower Wednesday as traders assessed the impact of the jump in US Treasury yields overnight, and comments from a Federal Reserve speaker led to receding bets for Fed rate cuts.
MSCI’s Asia Pacific Index fell for a second day, as shares from Hong Kong to Japan and Australia dropped. A sell-off in Australian bonds deepened after inflation figures topped estimates, while Japanese benchmark yields hit their highest since 2011.
Treasuries steadied in Asia after falling on a pair of weak US note sales and ahead of the Fed’s favorite price gauge due later this week.
China’s yuan slid to the lowest since November amid signs policymakers are letting the currency drop against a resilient dollar. Emerging Asian currencies, including South Korea’s won and Malaysia’s ringgit, also weakened. “The early reaction is to the higher rates in US, and resilient consumer confidence data out of US reinforcing risks of rates staying higher for longer,” said Xin-Yao Ng, investment director at Abrdn. “That’s generally negative for Asia since it supports a stronger dollar over Asian currency.”
