Asian Bond Yields Rise on Growing Expectations for Fed Rate Hike — Update

By Sherry Qin and Kimberley Kao

Asian bond yields rose, after hotter-than-expected U.S. inflation data and Federal Reserve officials' hawkish commentary raised the chances of a rate increase next month.

U.S. consumer prices rose 0.4% in October from the previous month, overshooting market expectations. Meanwhile, Fed governor Christopher Waller and Dallas Fed President Lorie Logan both made hawkish comments, suggesting that the central bank might consider raising rates at a faster clip.

"The pick-up in inflation is occurring at the same time as activity and the labor market are firming, raising the likelihood that inflation pressures are transitioning from exogenous shocks to being endogenously generated," ANZ Research analysts said in a note.

Expectations for a rate hike in December sent the benchmark 10-year U.S. Treasury yield above the 5% threshold on Tuesday.

The 10-year Japanese government bond yield was recently up 10 basis points to 2.792%, Factset data showed. The 10-year Australia government bond yield climbed 5.4 basis points to 5.044%. New Zealand's 10-year yield was up 6.2 basis points at 4.682%.

As the swaps market has essentially priced in a December rate increase, it's questioning how restrictive U.S. monetary policy may ultimately need to become, said Pepperstone head of research Chris Weston.

Spot gold rose 0.6% to $4,056.29 a troy ounce. "We remain cautious on the extent of any rebound," said Sherilyn Chew, strategist at DBS Group Research.

"We expect gold to remain broadly rangebound in the near term, with downside risks less acute than previously, but the conditions for a sustained rally not yet in place," with Fed tightening remaining the key constraint, Chew said.

Oil prices rebounded Wednesday after recent slumps. Although President Trump has signaled he doesn't plan to restart major combat operations, strikes have continued as the U.S. and Iran battle over the control of the Strait of Hormuz.

Front-month West Texas Intermediate futures were up 0.6% at $86.51 a barrel, while front-month Brent futures were 1.0% higher at $92.39 a barrel.

Asian equities were mixed on Wednesday, as investors weighed U.S. inflation data against strong regional tech earnings.

South Korea's Kospi rose 2.5% and Japan's Nikkei Stock Average gained 1.4%, while Taiwan's Taiex jumped 3.6%. Hong Kong's Hang Seng Index dropped 0.5% and China's Shanghai Composite Index was 0.7% higher.

"For equities, higher yields put downward pressure on valuations," Ipek Ozkardeskaya, senior analyst at Swissquote said in commentary.

"While upward pressure on yields-and borrowing costs-raises questions about equity valuations, earnings are coming in surprisingly strong," Ozkardeskaya said.

Higher U.S. yields, political uncertainty and questions surrounding Nvidia's leadership have created a challenging backdrop for growth equities, said Pepperstone's Weston. Yet, investors remain prepared to buy weakness when valuations and positioning become sufficiently compelling, he added.

The focus of the stock market has already shifted towards the investigation in Nvidia's Jensen Huang, said Felix Brill, chief investment officer of VP Bank. Data centers were the trigger for the recent selloff after the Democratic sweep at the U.S. midterm elections, but the underlying issue is bigger, Brill said.

The stock market's recovery "has not answered the question of whether investment in artificial intelligence will pay off politically and economically," he said.

"The next correction is a certainty. The question of AI expansion remains an open issue. It will occupy us well beyond one single election."

Write to Sherry Qin at sherry.qin@wsj.com and Kimberley Kao at kimberley.kao@wsj.com

(END) Dow Jones Newswires

November 11, 2026 01:50 ET (06:50 GMT)