Asian shares climbed on Tuesday and Treasuries sold off across the curve as investors question whether central banks can raise interest rates to rein in inflation without derailing growth.
Shares in Mainland China, Hong Kong, South Korea and Japan trading on a positive note.
Yields on two-year notes jumped 9 basis points to 2.57%, while benchmark 10-year yields rise 10 basis points to 2.84%.
In China, purchasing managers indexes for May showed service and manufacturing activity continuing to shrink amid Covid lockdowns, despite progress in containing the virus and resumed production at some Shanghai plants.
“The mood is temporarily better in markets,” Chris Iggo, chief investment officer for core investments at AXA Investment Managers, said in a note.
“I think the worst is over for bond markets but picking the bottom in equities is trickier. Iggo said another 10%-15% drop in equity markets couldn’t be ruled out.
In the US, Federal Reserve Governor Christopher Waller said he wants to keep raising interest rates in half-percentage point steps until inflation is easing back toward the central bank’s goal.
Meanwhile, President Joe Biden will hold a rare Oval office meeting on Tuesday with Fed Chair Jerome Powell amid the highest inflation in decades and ahead of US payroll numbers later this week.
Crude oil advanced with WTI around $117 and Brent trading around $122 after EU leaders agreed to pursue a partial ban on Russian oil in response to the invasion of Ukraine.