How Powell’s Surprise Rate Signal May Rip Through Asia Stocks, Currencies

Federal Reserve Chair Jerome Powell jolted investors with unexpectedly aggressive comments on the outlook for higher interest rates, impacting Asian assets with a 1% rise in the dollar, commodities slump, and US 2-year yield exceeding the 10-year.

March 9, 2023 . 3:37 PM

1 min read

Federal Reserve Chair Jerome Powell jolted investors with unexpectedly aggressive comments on the outlook for higher interest rates.
The dollar rallied 1%, stocks and commodities slumped and the US 2-year yield exceeded the 10-year one by a full percentage point.
Expect to see a broad-based selloff in Aussie and Asian markets led by the short end but with US rates underperforming.
Higher-for-longer is becoming the base-case scenario, and if that scenario materializes, EM can suffer.
It is clearly a step backwards for the markets given we had seen some comfort return after the last round when discussion appeared to be talking around an end in sight.