Asian Stock Market: Bears dominate on hawkish Fed concerns, NZX 50 drops the most

• Asia-Pacific markets track US futures to portray reflation fears, Fed rate-hike woes amid Japan’s off.
• US 10-year Treasury yields stay firm around 2.5-year top, justifies four-decade high CPI.
• Fed speakers jostle over 0.50% rate hike, South Korea prepares to challenge bond market moves.
• RBNZ survey hints at February rate hike, RBA’s Lowe shrugs off push towards lifting the rates.

Fears of monetary policy contraction weigh on the Asia-Pacific markets during Friday as US Treasury yields remain firm at a multi-month high.

The US 10-year Treasury yields crossed 2.0% for the first time since July 2019 after the US Consumer Price Index (CPI) for January refreshed a four-decade high with a 7.5% YoY figure, versus 7.3% expected and 7.0% prior. The benchmark T-bond yields currently seesaw around 2.035%. Also portraying the risk-off mood is the 0.84% intraday loss of S&P 500 Futures by the press time.

At home, MSCI’s index of Asia-Pacific shares ex-Japan drops 0.80% at the latest while Japan celebrates National Foundation Day.

Following that inflation data, St. Louis Fed President James Bullard went a step farther while supporting 100 bps rate hikes by July and for the balance sheet reduction to start in the second quarter, which in turn strengthened the US Treasury yields. On the contrary, Federal Reserve Bank of Richmond President Thomas Barkin tried to tame the bulls while saying that he would have to be convinced of a 'screaming need' for a 50 bps hike.

Even so, Reserve Bank of Australia (RBA) Governor Philip Lowe tried to defend the Aussie equity buyers while turning down hopes of a rate hike in his testimony. Though, Australia’s benchmark equity index ASX 200 drops 1.0% by the press time amid broad risk-off mood.

Elsewhere, the Reserve Bank of New Zealand (RBNZ) announced its survey of business for February 2022 while saying that the “Official Cash Rate (OCR) expectations continue to rise in the short and medium-term.” This joins the downbeat US stock futures and Wall Street performance to drown NZX 50, down 2.35% intraday at the latest.

Furthermore, the South Korean government and Bank of Korea (BOK) joined hands to battle the bond move but the KOSPI remains 0.90% down intraday by the press time. On the same line are the stocks in China and India while Indonesia’s IDX Composite drops 0.30% by the time of writing.

It should be noted that the risk-off mood favors the US Dollar Index (DXY) to refresh the weekly top while also weighing on the crude and gold prices.

Read: US Treasury yields hover around 2.5-year high, S&P 500 Futures drop 0.50% amid risk-off mood