Asian Equities Mixed, Treasuries Dipped as Investors Weigh Economic Risks

Asian stocks are mixed on Wednesday as investors weigh economic risks from accelerating inflation and accordingly Fed’s hawkish stance in fanning down the inflation number.

Shares in Mainland China marginally down while Hong Kong, South Korea and Japan is trading higher closed 1%. The MSCI Asian Index ex Japan is down by 0.10%.

U.S. inflation numbers came four decades high at 8.5% on a headline basis, beating Bloomberg’s estimate of 8.4%. However, core level inflation was better than expected at 6.5%.

Core inflation reading lead to treasuries to trim down on advancing while the latter prompted traders to pare back expectation on how aggressive the Fed would be in raising interest rates.

Fed Governor Lael Brainard said the U.S. central bank will move “expeditiously” to raise interest rates to a level that neither stimulates nor slows the economy this year. She said a decision on trimming down the Fed balance sheet could come as soon as May, with reductions starting in June.

Richmond Fed President Thomas Barkin said interest rates should reach the neutral range as quickly as possible and can move above that should price pressures persist.

The “inflation report on balance validates expectations that the Fed will hike by 50 basis points in May,” Silvia Dall’Angelo, senior economist at Federated Hermes Ltd., wrote in a note.

Meanwhile,  New Zealand implemented its biggest interest-rate hike in 22 years to bring down price pressures.

On Russian-Ukraine war, Putin vowed to continue his “military operation” in Ukraine and said peace talks are stalled. He also noted the conflict “a tragedy”.

In crude oil market, WTI is trading around $100 a barrel while Brent is trading around $104 a barrel.