SINGAPORE (Reuters – Stocks and bonds in Asia fell, and the dollar rose after a German hot inflation reading heightened fears about possible interest rate rises.

Rising oil prices are a sign of consumers’ continuing pain. Futures reached a peak of $122.43 per barrel in two months after the European Union pledged to cut Russian oil imports by year’s end.

U.S. Treasuries fell on Monday after the U.S. holiday. This pushed the yield for the 10-year bond to 2.8405% up almost 10 basis points (bps). [US/]

German Bund Yields increased by 8.1 bps overnight following a sharp rise in German consumer prices. The increase in German consumer prices is the largest in over 50 years. It strengthens the case for a large European Central Bank rate hike in July.

Later Tuesday will bring Eurozone inflation statistics.

The Chinese PMI (Purchasing Managers Index) numbers showed another month’s contraction in manufacturing and services activity. However, the pace of decline was slower.

Equity shares lost early gains and fell back to the flat in the Asian session. They were 0.4% higher. The broadest MSCI index of Asia-Pacific shares, which is not Japan’s, lost 0.2% after snapping a winning streak over two days. It fell 0.1% ()

Khoon Goh (head of Asia research, ANZ Bank Singapore) stated that “the focus is now really on the U.S. economic and China.”

The slowdown of the two biggest economies are not good news for global growth.

According to data released Tuesday, factory output of Japan, the third-largest country, fell in April, as Chinese demand declined.

China’s official PMI stood at 49.6 in May. This indicates that there was a decrease in factory activity, but it is slower than the April figure which was 47.4.

Global growth worries have stopped a rally of two weeks for currencies exported by countries worldwide and have stabilized the U.S. Dollar as investors have once again turned towards safety. [FRX/]

Christopher Waller from the U.S. Federal Reserve made some hawkish remarks. This was in response to recent fears that the Fed may pause following hikes in June, July.

I am in favor of 50 basis point increases (at the table at every meeting) until there is significant inflation reductions. Waller stated that until we achieve this, there is no point in stopping.

Fed Funds futures dropped sharply, particularly contracts for the first months next year. Investors were bracing for unprecedented interest rate increases that would push it towards 3% in the middle of 2023.

On Tuesday, the dollar was traded at $1.0744/euro, up 0.3% and 128.16yen, approximately 0.4% respectively.

Trade-sensitive Australian dollars and New Zealand dollars dropped, the latter falling 0.2% to $0.7180 and 0.4% to $0.6530. [AUD/]

The European Union’s agreement to reduce oil imports by Russia at the close of 2022 led to an increase in oil prices.

Futures prices reached $117.70/barrel [O/R]

A fraction less than $1,848 per ounce was possible due to the stronger dollar. Overnight, the dollar rallied strongly and climbed nearly 8% to $32,000. This was its highest level in 3 weeks. The Asian session saw it hover just above $31,540.