Stocks slip, short-term yields leap with inflation

Stocks slip, short-term yields leap with inflation

SINGAPORE: Tech shares slipped and short-term Treasury yields jumped on Tuesday as investors expect inflation to prompt interest rate hikes, with a hotter-than-forecast reading in Australia the latest sign of prices pressuring central bankers to act. The Australian dollar also rose about 0.4% and short-dated Aussie government bonds sold heavily after the data release, which showed Australian core inflation hitting a six-year high. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5% - although it remains on course for its best month of the year - led by tech shares falling in Hong Kong. Japan's Nikkei fell 0.6%. Strong earnings had earlier propelled Wall Street indexes to fresh records and U.S. stock futures were flat in early trade. "There are a couple of things that are of concern to investors, and inflation news is everywhere," said Khoon Goh, head of Asia research at ANZ Bank in Singapore. "This is where expectations of when the Fed might start to lift interest rates is starting to come in to focus. The announcement of tapering next week is pretty much a done deal - markets have moved past tapering and are focused on tightening." Two-year U.S. Treasury yields US2YT=RR leapt nearly 5