By Gina Lee

Investing.com – Asia Pacific stocks were down on Wednesday morning, with investors bracing for the U.S. Federal Reserve to reduce its debt holdings much quicker to curb inflation.

China’s was down 0.55% by 10:25 PM ET (2:25 AM GMT) and the was down 0.28%. After a two-day holiday in China, the Chinese markets were reopened on March 20,22. The number was 42.

Hong Kong’s fell 1.74%, with markets also re-opening after Tuesday’s holiday.

Japan’s slid 1.94% and South Korea’s fell 0.88%.

The Australian dollar was at 0.82%.

U.S futures fluctuated in reaction to Wall Street’s losses overnight. Treasuries suffered further losses with the 10-year yield reaching its highest level since 2019, while in Asia Pacific and New Zealand the yields also fell.

Concerns about Ukraine’s war, which was triggered by Russia’s invasion of February 24, remain. The U.S., European Union (EU) and Group of Seven are coordinating on a fresh round of sanctions on Russia, which could isolate the country even further and increase the war’s economic impact.

These sanctions include an American ban on investments in the country and an EU ban for coal imports. They also have increased penalties against financial institutions. They could also target Russian President Vladimir Putin’s daughters, political figures and tycoons.

On the central bank front, Fed Governor on Tuesday said that getting inflation under control is “paramount,” adding that the central bank could begin paring its balance sheet more quickly as soon as May 2022.

Brainard’s comments drew even more attention to the minutes from the Fed’s latest meeting, due later in the day. The minutes will provide clues to investors about the rate at which the Fed will raise interest rates, and how quickly it will tighten its quantitative stance. There are growing concerns that an economically weaker Fed could result from a looser monetary policy.

“The key risk for Wall Street correlated world stock markets remains the Federal Reserve tightening cycle,” Jefferies LLC global head of equity strategy Christopher Wood said in a note. The note noted that the effect of tighter monetary policies will be faster due to the high level of debt. This is especially true if there are quantitative tightenings along with rate increases.

Investors will be watching speeches by other Fed policymakers during the week. The Philadelphia Fed President Patrick Harker will address later in the day. Raphael Bostic (Atlanta Fed President) and James Bullard (St. Louis Fed President) will also speak on Thursday.

In the meantime, on Friday, they will issue their policy decision.

Bitcoin fell below $45,000, another indicator of decreasing risk appetite.