There are several reasons for concern that translate into a red spot, in Asian stock markets and in the West. On the one hand, Treasury yields are not calming their climb, and inflation expectations are following suit. On the other, the tensions that become apparent between the world’s two largest economies also dampen optimism.
Fed Chairman Jerome Powell put markets to rest on Wednesday by saying that interest rates should remain near zero while the economy heals from the covid-19, but Treasury yields have not stopped rising and hit 1.75% for the first time since January 2020. Inflation expectations are at multi-year highs.
Also shaking things up are the high-level talks between the United States and China since Joe Biden took office, in which several criticisms have been advanced regarding human rights, trade, cyber-security, and international alliances, leaving major differences in sight.
In the aftermath, the Chinese CSI 300 skidded 2.6%, hand in hand with Hong Kong’s Hang Seng, which fell 2.2%. Japan’s Nikkei was down 1.4 percent and Australia’s S&P/ASX 200 gave way 0.6 percent. US and European futures are also in the red.
