AFP, Hong Kong :
Asian markets fluctuated Monday as the battle between economic optimism and fears about the inflation and possible rate hikes the recovery will fuel continues to play out on trading floors. The Turkish lira plunged more than 17 percent at one point in early trade after President Recep Tayyip Erdogan sacked the country’s market-friendly central bank chief and replaced him with a former ruling party lawmaker.
After a year-long rally across global indices, investors are struggling to maintain the momentum as government bond yields push ever higher – a sign that borrowing costs will rise in the future.
The sharp rise in US Treasury yields – which go in the opposite direction to prices – is being caused by investors selling the bonds owing to expectations the strong recovery and vast government spending will fire inflation.
The panic comes despite repeated pledges by Federal Reserve boss Jerome Powell and other top officials including Treasury Secretary Janet Yellen that the jump in inflation will likely only be temporary and the bank will do whatever is needed to prevent it getting out of control.
And while vaccine rollouts are picking up in Britain and the United States, investors are growing worried about Europe, where the inoculation programme has stuttered and a hike in new cases forces countries including France and Germany to reimpose lockdowns.
