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Stocks and bonds both fell as a result of the German surprise, which reignited inflation fears

Image: Reuters Berita 24 English -  After a scorching inflation data in Germany heightened anxieties about the pace and scale of anticipat...

Image: Reuters

Berita 24 English -  After a scorching inflation data in Germany heightened anxieties about the pace and scale of anticipated interest rate hikes, stocks wobbled and bonds sank in Asia on Tuesday, while the dollar climbed.

Worries about the continuance of consumer misery were exacerbated by rising energy prices. Brent crude prices hit a two-month high of $122.43 a barrel after the European Union pledged to cut Russian oil imports by the end of the year.

After returning from the US vacation on Monday, treasuries fell, with the 10-year bond's yield rising nearly 10 basis points (bps) to 2.8405 percent. [US/]

After German consumer prices surged at their highest pace in half a century, German bund rates rose 8.1 basis points overnight, bolstering the case for an outsized European Central Bank interest rate hike in July.

On Tuesday, Eurozone inflation figures will be released.

Chinese Purchasing Managers' Index (PMI) figures showed another month of contraction in services and manufacturing activity, though at a reduced pace of decline.

Early in the Asian session, S&P 500 futures gave up early gains to trade flat, while Nasdaq 100 futures were up 0.4 percent. MSCI's broadest index of Asia-Pacific stocks outside Japan lost 0.2 percent after a two-day gaining streak. The Nikkei 225 index in Japan dipped 0.1 percent. [.T]

"Right now, the attention is largely on the US economy and China," said Khoon Goh, Asia research head at ANZ Bank in Singapore.

"The world's two largest economies are slowing, for different reasons, and this isn't good for global growth."

Factory output in Japan, the world's third-largest economy, fell dramatically in April as Chinese demand slowed, according to data released on Tuesday.

China's official PMI for May was 49.6, showing a decrease in industrial activity albeit at a slower rate than in April, when it was 47.4.

Concerns about global growth have slowed a two-week advance in exporter currencies, bringing the US dollar back into balance as investors seek protection. [FRX/]

Recent expectations that the Fed will take a breather following rises in June and July were shattered by hawkish remarks by US Federal Reserve Governor Christopher Waller.

"Every meeting, I propose putting 50 (basis point hikes) on the table until we see significant reductions in inflation. I don't see the purpose in stopping till we get that "Waller remarked.

Fed Funds futures plummeted, particularly those for the first several months of next year, as investors braced for a barrage of interest rate hikes that would drive the benchmark rate to 3% by mid-2023.

On Tuesday, the dollar was trading at $1.0744 per euro, up 0.3 percent, and 128.16 JPY, up 0.4 percent.

The trade-sensitive Australian and New Zealand dollars declined, with the Aussie down 0.2 percent at $0.7180 and the Kiwi down 0.4 percent at $0.6530 at the time of writing. [AUD/]

Oil prices increased when the European Union agreed to reduce Russian oil imports by the end of 2022.

Crude oil futures in the United States increased to $117.70 a barrel. [O/R]

The higher dollar dragged spot gold down to $1,848 per ounce. Bitcoin surged nearly 8% overnight, breaking the $32,000 barrier for the first time in three weeks. Early in the Asian session, it was barely below $31,540.

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