Asia stocks drop as Fed rate hikes back in focus: Markets wrap

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Spot gold rose 0.3% to $1 874.99 an ounce.

The rally in Asian equities halted as Treasury yields surged after US inflation data bolstered bets on Federal Reserve rate hikes. The latest data on continued weakness in China’s economy added to the gloom.

Swap contracts pushed the odds of another quarter-point Fed hike to about 40% — from closer to 30% Wednesday after the core consumer price index, which excludes food and energy costs, rose 0.3% in the US last month. Economists favor the core gauge as a better indicator of underlying inflation than the overall CPI, which climbed 0.4%, boosted by energy costs. Forecasters had called for a 0.3% monthly advance in both measures.

Treasuries gained slightly in Asia after dropping across the curve in the previous session, with the yield on the 30-year rate surging as much as 19 basis points after a $20 billion auction of the securities drew weak demand.

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Stocks, futures rise as focus switches to US CPI: Markets wrapSpot gold rose 0.3% to $1 879.44 an ounce.
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