Stocks in Asia and US futures declined along with bonds, as traders consider cooling expectations of Federal Reserve rate cuts for the rest of the year.
The MSCI AC Asia Pacific Index fell as much as 1.1%, as benchmarks in Japan, Australia and South Korea dipped. That’s after equities in the US dropped from nearly overbought levels, following a relentless advance to all-time highs.
European contracts bucked the trend and rose. Treasuries’ 10-year yields ticked up to 4.22% in Asian trading on Tuesday, after Federal Reserve Bank of Kansas City President Jeffrey Schmid said he favors a slower pace of interest-rate reductions given uncertainty about how low the US central bank should ultimately cut rates.
Bonds from Australian and New Zealand fell. The risk of a slower rate-cut pace “would be dollar-positive and also normally a headwind for Asia equities,” said Kieran Calder, head of equity research at Union Bancaire Privee in Singapore.
