Asian equities could trade positive amid a broad risk-on mood on global risk assets, which was helped by improving the Shanghai COVID situation and a pullback in the technology sector and the USD. It is worth noting that the risk appetite yesterday was strong, and it didn’t change throughout the US session, even with US Treasury Yields trading higher with the yield on the US 10-Year Note eyeing the 3.0% level. If US yields keep steepening faster, it could impact the demand for risk assets. US rates steepened after Fed Chair Jerome Powell backed the hawkish argument in which he stated the FOMC will not hesitate if they need to move past the neutral level on rates and will continue raising rates until they see inflation coming down.
Some pro-global growth could emerge on the trade front if positive developments are reached in the coming months. Traders will keep the US/China trade theme on a special radar as US Treasury Secretary Yellen and USTR Tai are reportedly divided in their stances on Chinese tariffs, and as such, US President Biden will need to decide on whether to reduce taxes on Chinese goods by the middle of summer, whereas Tai wants to refrain from doing so as part of a broader China strategy that will protect domestic jobs.