18 Jan 2022
Asian Shares Plummet while Bond Yields Soar Prior to Fed Rate Hike Policy
The Index Today
On Tuesday, Asian shares faced a drop while two-year U.S. Treasury yields rose by 1% ahead of the U.S. Federal Reserve’s upcoming policy on a potential earlier-than-expected interest rate hike implementation.
MSCI’s broadest index of Asia-Pacific shares outside Japan surged by 0.4% before dipping by 0.45%. While Japan’s Nikkei plunged by 0.23%, Hong Kong’s Hang Seng Index fell from a 0.6% gain to 0.42%. These developments have been informed by the two-year U.S. Treasury yields which soared over 1% since February, 2020.
Oil reached a record seven-year high after Yemen’s Houthis instigated an attack on the United Arab Emirates.
According to John Milroy of Sydney’s Ord Minnett, “[Fed rate hikes] will be faster than markets currently expect. Boom conditions remain in the U.S. with a tight labour market. Good for world growth but adds to the inflationary pressures."