Asian equities could trade negatively after a risk-off session on Wall Street. A hotter US Producer Price Index data and hawkish comments from Fed’s Mester and Bullards opened the door to a 50 bps hike at the last meeting and is not ruling anything out for the next meeting. The tech sector could be the outperformer due to the rates hawkish activity where US short-term rates rose, and Treasury Yields follow the trend. US inflation breakevens steepened across the curve. That price action is giving the USD a boost against major FX pairs.
In China, traders will be keeping an eye on the geopolitical front, with talks potentially taking place between US Secretary of State Blinken and top Chinese diplomat Wang Yi as both attend a Munich Security Conference, which kicks off today. For the session ahead, volatility could remain high as US equity options are set to expire, and it will be the last trading day in the US due to Monday’s holiday for President’s Day. Due to recent hawkish remarks, global macro traders will be paying close attention to FOMC voters Fed’s Barkin (voter) and Bowman (voter), who will be speaking later today.
