Asian equites declined on Wednesday while bonds extended selloff as investors weigh rising COVID-19 cases in China and hawkish Federal Reserve.
Shares in Mainland China dipped nearing 1%, Hong Kong trading marginally higher while South Korea and Japan dipped moderately. The MSCI Asian Index ex Japan down by 0.64%.
Chinese banks held lending rates despite central bank called for easing measures to support the economy.
U.S. treasury yields rose as investors weighing faster than expected hike in rates. Chicago Fed President Charles Evans said interest rates will probably exceed the neutral level.
The U.S. 10-year real yields turned positive for the first time since 2020 reflecting expectation of tighter monetary policy.
Yen continued to fall against dollar with the Bank of Japan offering to buy an unlimited amount of bonds to control the curve. Contrary to Fed, Bank of Japan maintaining a ultra-loose monetary policy to support the pandemic hit economy.
Meanwhile, a top IMF official warned equites and bond might be further volatility as the Fed and other central bank might be forced to tighten monetary policy more than anticipated as inflation goes out of control.
Oil counted to its loss streak after IMF signaled gloomy global growth amid war in Ukraine and soaring COVID-19 infection in China. The WTI is trading around $102 a barrel while the Brent is trading around $107 a barrel.