Powell power.

Federal Reserve Chair Jerome Powell. Photo: Samuel Corum | Getty Images

Asian stocks looked set to follow a selloff on Wall Street, with bond yields rising as traders comb through remarks from a slew of Federal Reserve officials and await Jerome Powell’s speech for clues on the interest-rate outlook. Equity futures for Japan, Hong Kong, and Australia pointed to declines after the S&P 500 almost wiped out its weekly advance. Treasury two-year yields, which are more sensitive to imminent policy moves, climbed above 5%. Powell is scheduled to deliver his speech at 10:05 a.m. Washington time today.

Selloff continues.

Shares in Asia were poised to drop as investor concern that monetary policy makers may not be done raising interest rates fueled a further selloff in US stocks and bonds. Equity futures for benchmarks in Japan, Australia, and Hong Kong all declined. The 10-year Treasury yield rose as high as 4.33%, within a few basis points of its 2022 highs. Investors will soon be turning to next week’s gathering of policymakers at Jackson Hole in Wyoming to gauge Fed sentiment.

Prices creep.

Federal Reserve policymakers are increasingly likely to leave interest rates unchanged at their next meeting after fresh evidence of easing inflation emerged. But they’ll be careful to strike a tone that their job isn’t done yet. The core consumer price index, which excludes food and energy costs, rose 0.2% for a second month in July, marking the smallest back-to-back gains in more than two years. It’s unclear where Fed officials will go from here. One faction of the policy-setting committee argues that the past year-and-a-half of interest-rate hikes has done its job, while another group contends that pausing too soon could risk inflation reaccelerating.

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Seeking clues.

Stocks in Asia were set for a mixed open following a slump in US equities and bonds, as focus shifts to Friday’s jobs report for clues on the outlook for the Federal Reserve’s next steps. Futures for benchmark indexes in Japan pointed to a decline, while those for Hong Kong were set to rise. The S&P 500 and the Nasdaq 100 both declined a third day, setting them on a course for their worst weeks since mid-March. Another slide in longer-dated Treasuries put them on pace for their worst week of 2023 amid signs of unexpected economic strength.