Asian stocks slipped while the U.S. dollar was steadfast on Wednesday, following U.S. inflation data and remarks from central bank officials that have investors worrying interest rates are going to be higher for longer.
Headline U.S. CPI came in at 6.4% year-on-year for January, a bit higher than the 6.2% economists had expected, setting off selling in the bond market and Fed funds futures as hopes that rates could be cut later this year grow dimmer and dimmer.
Fed funds futures now imply a peak above 5.2% by mid-year and rates above 5% at year’s end.
Two-year Treasury yields, which rise when prices fall, climbed nearly nine basis points in New York trade to 4.611%, widening their premium over 10-year rates – an unusual phenomenon that reliably signals recession.
