Asian stock markets are likely to face pressure this morning amid concerns over rising oil prices and elevated government bond yields, which are adding uncertainty to the economic outlook and the direction of interest rates. Japan's Nikkei index opened down 0.6% at 68,648.50 points, pressured by electronics and metals shares, while South Korea's stock market is closed today for a national holiday. US President Donald Trump posted on Truth Social yesterday, confirming that the United States is making progress in talks with Iran and that the US will not attack Iran before the US midterm elections on November 3. Meanwhile, Iranian Foreign Minister Abbas Araghchi said Iran will send its response to US comments on a proposal to end the war within the next few days, after receiving US comments on Iran's seven-day proposal, and is carefully reviewing the details, with the two sides exchanging messages through intermediaries. At the same time, Christopher Waller, a member of the US Federal Reserve's Board of Governors and its monetary policy committee, said the Fed may need to raise interest rates further if economic data released gradually continues to come in as expected, in order to speed inflation back to the Fed's 2% target.
Fed's Waller said the Fed may need to raise rates further if data comes in as expected, implying a higher policy rate.
Hawkish Fed commentary on possibly raising rates further pushes Treasury yields higher.
