Asian stocks open lower on fears expensive oil will stoke inflation

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Asian stock markets opened lower today as investors worried that elevated oil prices could accelerate inflation and force central banks to keep interest rates high for an extended period. Rising US government bond yields, which have climbed to multi-year highs, also continued to weigh on risk assets. Japan's Nikkei index opened down 0.93% at 68,313.46 points, while South Korea's composite index opened down 0.47% at 6,938.27 points. The yield on 10-year US government bonds jumped to 5.327%, the highest level since April 2002, while the yield on 30-year US government bonds climbed to 5.678%, a 24-year high. Lorie Logan, president of the Federal Reserve Bank of Dallas, said US inflation remains above the Fed's annual target and that the Fed still needs to raise interest rates significantly. However, surging bond yields may help bring inflation under control, which would reduce the need for more restrictive monetary policy. In addition, the US government has told Germany and France to release emergency diesel reserves to help lower soaring global fuel prices, warning that without action the United States could consider banning exports of US diesel. Meanwhile, China announced it will suspend exports of oil products in October amid concerns about domestic stockpiles.

Impact on assets 3

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EFFR
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Dallas Fed's Logan says inflation remains above target and the Fed still needs to raise rates significantly, implying a higher policy rate.

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