Bond selloff.

Asian stocks declined today, trimming a first-half rally in global equities. Treasury yields steadied following a surge Thursday on bets for further rate hikes, which cast a shadow over markets. Asian stocks were set for a mixed open on the last day of the quarter after a choppy session for US equities, while Treasury yields soared on bets on further tightening by the Federal Reserve. Contracts for benchmarks in Hong Kong and Japan posted modest declines while those for Australia pointed to a small gain. As the first half draws to a close, Japan’s Topix has ratcheted up a gain of more than 20%. In the US a selloff in bonds saw two-year yields jump 15 basis points as investors moved closer to Fed’s view for tighter monetary policy in the coming months.

Unrelenting inflation.

Janet Yellen. Photo: Al Drago | Bloomberg

Treasury Secretary Janet Yellen said she sees a diminishing risk of the US falling into recession, suggesting that a slowdown in consumer spending may be the price to pay for finishing the campaign to contain inflation. Her comments came after Federal Reserve Chair Jerome Powell said returning US inflation to 2% was crucial to support the long-term health of the US economy, and that one or two more interest-rate increases may be needed this year. Meanwhile, rate hikes are echoing around the world as global inflation proves unrelenting.

FSOC meets today.

(Jun 16) — Treasury Secretary Janet Yellen will preside over a meeting of the Financial Stability Oversight Council at the Treasury Department today. The meeting will consist only of an executive session. The preliminary agenda for the executive session includes an update on financial stability vulnerabilities, an update on developments in the commercial real estate market, and an update on developments in the banking sector. Readouts for past Council meetings are available here.

FSOC update.

The Financial Stability Oversight Council webpage below has recently been updated.

CFRAC

Established in October 2022, the Climate-related Financial Risk Advisory Committee is FSOC's first external advisory committee. CFRAC assists the Council in gathering information on, conducting analysis of, and making recommendations to identify, assess, and mitigate climate-related risks to the financial system.

CFRAC meeting materials

During the first CFRAC meeting, members heard from Secretary of the Treasury Janet Yellen and received information on both the staff-level Climate-related Financial Risk Committee and the charge model that will be used to assign future work to CFRAC members.