Asian stocks slipped while the U.S. dollar held firm 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.
European equity markets looked set to follow Asia lower. The pan-region Euro Stoxx 50 futures slipped 0.21%, German DAX futures were down 0.23%, and FTSE futures edged down 0.11%.
Headline U.S. consumer inflation 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.
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.
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