Shares in Asia slid while Treasury yields and the dollar rose in a sign investors are yet to fully recalibrate interest rate expectations.
Treasury yields continued to climb after the 10-year rate added 11 basis points to set a 16-year high on Monday to trade above 4.54%. The momentum flowed into Asia, with Australian and New Zealand yields also rising. Increasing yields supported the greenback. The Bloomberg dollar index held its gains from Monday, when it closed at the highest level since December. The yen steadied after weakening to a year low after Bank of Japan officials doubled down on the message that stimulus is still needed.
Crude prices edged down Tuesday, falling for a second session. Traders are increasingly concerned that rising oil prices risk fanning inflation, which will make it difficult for policymakers to reduce rates anytime soon. Hedge funds boosted exposure to oil on bets tightening supplies will stoke demand.