Asian shares were mostly higher Wednesday on hopes that the curbs on U.S. interest rates may moderate after new data showed signs of slowing inflation.
Benchmarks rose in early trading in Japan, South Korea and Australia, while slipping in China. Regional optimism was lifted by the easing of a COVID-19 lockdown in Shanghai. That kind of development is a big plus for the region's major drive of growth.
“The fact remains that pricing pressures are still elevated at its highest level in 40 years and the near-term outlook for an aggressive tightening of policies to cool demand stays unaltered. Comments from Fed Governor Lael Brainard overnight, who has been a well-known dovish voice in the Fed, continued to reveal a firm stance in getting inflation down," said Yeap Jun Rong, market strategist at IG in Singapore.
“The risk is that a red hot labor market grows cold under the force of those higher food, fuel, and financing costs. This is a time when economic resilience will be tested.” But Treasury yields pulled back on Tuesday following the inflation report. The 10-year yield slid to 2.72% from 2.77% late Monday. It was as high as 2.83% overnight, before the inflation report’s release. The 10-year yield nevertheless remains well above the 1.51% level where it began the year.
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