The turning point was Russia’s invasion of Ukraine, which triggered an upheaval in commodities markets.
The world is now facing a synchronized inflation outbreak as food and energy prices surge in Asia, a shift from just a few months ago when the region appeared to avoid the price fever gripping the U.S. and parts of Europe. Inflation readings across the region — China, India, Indonesia, Philippines, Thailand and South Korea — recently rose more than forecast, while New Zealand on Wednesday hiked rates by the most in 22 years over price worries. And accelerating manufacturing costs suggest the worst is yet to come.
Markets are starting to price in rising inflation expectations and more aggressive central bank action across much of Asia. That’s beginning to mirror trends seen in the U.S., where data Tuesday showed consumer prices last month rose by the most since late 1981, piling fresh pressure on the Federal Reserve to respond.
Regional government bond yields have risen through this year, led by South Korea, with the emerging Asia total return index down 2.6%, its worst performance since 2013. That signals an expectation that some central banks will raise interest rates to slow inflation and prop up their currencies as capital leaves the region...Read More
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