Marketmind: U.S. bond yields, dollar turn the screw on Asia

With inflation near its highest in 24 years, the Bank of Korea is expected to raise its base rate a quarter percentage point to 2.50%. A bolder move to 2.75% would put a rocket under the won and lift it from this weeks 13-year lows against the dollar.

China is going the other way. Not only is Beijing cutting interest rates, Reuters exclusively reported on Wednesday that Chinas foreign exchange regulator is warning banks against aggressively selling the Chinese currency.

This would be a new sign of official discomfort with recent weakness of the yuan, which is languishing at a two-year low against the dollar.

Due to the greenbacks broad strength – including against most Asian currencies, – the steady grind higher in U.S. bond yields and renewed weakness in equities, financial conditions in emerging markets are beginning to tighten again.

The 10-year Treasury yield hit a two-month high of 3.12% on Wednesday, and the S&P 500s rise of around 0.5% was pretty weak considering it had fallen 3.5% over the past three sessions.

On the corporate front, Asia-focused insurance group AIA releases half yearly earnings, while attention could turn to shares in India‘s NDTV Ltd after their jump to a 14-year high on Wednesday, after billionaire Gautam Adani’s conglomerate moved to take a near 30% stake in the media group.

HSBC is also under the spotlight, after Chinas Ping An Insurance Group said it supported calls to restructure the global banking giant. Ping An is HSBC largest shareholder with an 8.3% stake worth around $10.3 billion.

Key developments that should provide more direction to markets on Thursday: