Asian equities could trade negative following a sharp sell-off after a poorly received US 30-year Treasury auction and hawkish remarks from Federal Reserve Chair Jerome Powell. This sentiment led to an immediate re-evaluation in the money markets, delaying expectations for a full 25 basis point rate cut from June to July. This concern was exacerbated by reports of a significant Chinese bank suffering from a ransomware attack that affected its Treasury settlements, potentially influencing the auction’s outcome.
As the macro calendar is light, the markets will digest the latest hawkish move on the US Treasury yields, which could drive Asia’s equities and credit market. Also on the radar, more headwinds could come from the FX markets, as USD is getting a strong bid, as traders are positioning going to the weekend with all eyes on next week’s US CPI and Chinese LPR rate decision.
