Asian Stocks, Bonds Poised to Fall on Hawkish Fed: Markets Wrap

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June 18, 2026 - 01:27

6 minutes

(Bloomberg) — Asian stocks and bonds looked set to track US losses after the Federal Reserve signaled rates may need to rise further to contain inflation.Equity-index futures for Japan, South Korea and Australia pointed to lower opens after the S&P 500 fell 1.2% and the Nasdaq 100 dropped 1%. US stock futures edged higher in early Asian trading, offering a measure of relief after Wednesday’s selloff. US crude oil prices declined more than 1%. The yen weakened to its lowest level against the greenback since July 2024, increasing the risk of official intervention.Australian short-end bond yields rose five basis points early Thursday after two-year Treasury yields, which are highly sensitive to Fed policy expectations, jumped 13 basis points to 4.18%. Roughly half of Fed policymakers projected rate hikes this year, prompting traders to fully price in an increase by October and see a strong chance of a move as soon as September.Fed Chair Kevin Warsh, in his first press conference as head of the central bank, declined to offer guidance on the next policy move. He emphasized that inflation has remained above the Fed’s 2% target for several years and reiterated the central bank’s commitment to restoring price stability.“Half the committee is expecting rate hikes this year, which is a real shot across the bow at the market,” said Bob Michele, chief investment officer and global head of fixed income at JPMorgan Asset Management. “I think they’re getting ready for rate hikes.”On the geopolitical front, President Donald Trump said he has signed the US-Iran deal. Attention will now turn to the shipping companies that had largely stopped sending their vessels through the Strait of Hormuz because of blockades by both the US and Iran. Trump had said earlier the deal would be signed on June 19 to allow for any mines in the strait to be cleared away.Investors are already looking beyond the conflict, according to Morgan Stanley strategist Mike Wilson, even as the proposed agreement leaves many of the most difficult issues unresolved.“The market’s moved past the war,” Wilson said, pointing to oil prices that never rose past peaks set during the onset of Russia’s conflict with Ukraine. “We just learned how much supply is out there,” he said.The Fed decision marked the fourth consecutive meeting in which policymakers left rates unchanged. Officials described economic growth as “solid” and highlighted strong productivity gains and capital investment, while making clear that inflation has become a greater concern than labor-market weakness.“The Fed’s recent hawkish shift was not just about higher energy prices,” said Kay Haigh at Goldman Sachs Asset Management. “Despite the recent pullback in oil, half of the members of the FOMC expect rate hikes as soon as this year, reflecting strong labor market and inflation data.”Warsh also announced the creation of a task force to review the Fed’s $6.7 trillion balance sheet, an issue he has long criticized. The group would examine whether “monetary policy is coming from our interest rate tool or our balance sheet tool,” he said.Investors in Asia will also be watching technology stocks after a mixed session for US peers. Broadcom Inc., Micron Technology Inc. and Applied Materials Inc. were among the biggest contributors to gains in the S&P 500, helping lift the Philadelphia Semiconductor Index 1.4%. At the same time, all members of Bloomberg’s Magnificent Seven Index fell at least 1%, dragging the megacap gauge down 2.8%. SpaceX shares dropped 4.9%, snapping a rally that had lifted the stock roughly 50% since its public listing through Tuesday’s close.In Japan, investors remained concerned the central bank was not tightening policy quickly enough to contain inflation and stabilize the yen, even after it raised its benchmark rate to the highest level since 1995 earlier this week. Deputy Governor Shinichi Uchida said the exchange rate is important to the economic outlook but is not a direct policy target.Corporate Highlights:Blue Origin is already rebuilding the Florida launch site where its New Glenn rocket exploded last month, making way for the space company to fly again this year and rejuvenate its ambitions to challenge SpaceX. CME Group Inc. Chief Executive Officer Terry Duffy is handing over the reins after more than 25 years at the world’s largest derivatives exchange. He will step down on March 1 and transition to executive chairman. Chief Financial Officer Lynne Fitzpatrick will take over as CEO. La-Z-Boy Inc. jumped after the home furniture store’s reported adjusted earnings per share for the fourth quarter beat the average analyst estimate. UniQure NV soared after the company announced it will be able to seek US approval for its Huntington’s disease gene therapy before conducting a new study. Some of the main moves in markets:StocksS&P 500 futures rose 0.6% as of 8:24 a.m. Tokyo time Hang Seng futures fell 0.3% S&P/ASX 200 futures fell 0.7% CurrenciesThe Bloomberg Dollar Spot Index fell 0.1% The euro was little changed at $1.1508 The Japanese yen was little changed at 160.55 per dollar The offshore yuan was little changed at 6.7746 per dollar The Australian dollar was little changed at $0.7018 CryptocurrenciesBitcoin was little changed at $64,388.85 Ether was little changed at $1,747.02 BondsAustralia’s 10-year yield advanced three basis points to 4.80% CommoditiesWest Texas Intermediate crude fell 1.1% to $75.94 a barrel Spot gold rose 0.6% to $4,281.53 an ounce This story was produced with the assistance of Bloomberg Automation.©2026 Bloomberg L.P.