Asian stocks face a choppy open Thursday after Federal Reserve Chair Jerome Powell signaled a March interest-rate liftoff and left open the possibility of hikes at each policy meeting. Treasuries slid, the dollar jumped and U.S. shares were mixed.
Australian equities climbed, while futures for Japan slipped and Hong Kong’s were steady. U.S. contracts pushed higher. The S&P 500 on Wednesday wiped out a gain of over 2% to close down and the technology-heavy Nasdaq 100 erased almost all of a 3.5% rise.
Treasuries tumbled, particularly shorter maturities, and the gap between five- and 30-year yields was around the narrowest since early 2019. Global bonds now face losses, with the New Zealand 10-year yield hitting the highest since 2018. The dollar rallied. The yen and commodity-linked currencies were lower.
Powell reinforced the Fed’s determination to quell the highest inflation in a generation amid a robust economic recovery from the pandemic. The central bank also said it expects the process of balance-sheet reduction will commence after it has begun raising borrowing costs.
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