Bonds slide, yen dumped as interest rate hikes loom

Bonds slide, yen dumped as interest rate hikes loom

The 10-year Treasury yield rose 9.9 basis points (bps) overnight and hit 3.0580% early in the Asia session. The move has pulled the dollar higher and poured cold water on initial optimism about China's emergence from COVID lockdowns.

The dollar added another 0.6% against the yen on Tuesday to touch 132.75, its highest since 2002, as the Bank of Japan is a standout laggard while the rest of the world moves to try and hit inflation hard with interest rate hikes.

Ten-year gilt yields rose as far as 10.2 bps to a seven-year high of 2.256% on Monday.

"The train of thought appears to be that ... any path to an earlier (British) election could lead to more fiscal measures out of the UK," said NatWest Markets strategist John Briggs.

"This in turn has higher inflation risks," he said, while across the Atlantic "the market feel is one of back to 'where does this stop'" as the 10-year Treasury yields topped 3%.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.8% as Hong Kong's market pared back some of Monday's gains. Japan's Nikkei inched up 0.3%.

Beijing is easing COVID curbs and on Monday the Wall Street Journal reported that a cybersecurity probe of ride-hailing