(Bloomberg) — Stocks in Asia fell, tracking Wall Street shares lower, after the latest evidence of stubborn US inflation spurred bets the Federal Reserve will be in no rush to cut rates.

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Equity benchmarks in Japan, South Korea and Australia were all in the red, while stock futures for Hong Kong slipped. Contracts for US shares steadied in Asian trading after the S&P 500 erased earlier gains and fell more than 1% in a volatile session.

Investors will now turn their focus to China’s torrent of economic indicators Tuesday. The slowdown in the nation’s economy in the first quarter probably wouldn’t be a strong start to a year in which the government has set an ambitious 5% target, according to Bloomberg Economics. Ten-year bond yields are poised to break to the lowest level since 2002 on growth expectations.

“China’s monthly data dump is released today and is likely to reveal a moderation in economic activity,” said Kyle Rodda, senior market analyst at Capital.Com Inc. While the Chinese economy is showing signs of recovery, “it remains uncertain the strength of the growth impulse and whether there’s momentum for the economy to reach the central government’s ‘about 5%’ growth target,” he added.

Treasuries steadied after bond yields jumped to new year-to-date highs on stronger-than-expected retail sales data. Oil gained as Israel vowed to respond to an unprecedented attack by Iran, keeping tensions elevated in the Middle East.

“Stocks began to violate uptrends and pull back,” said Craig Johnson at Piper Sandler. “Interest rates are expected to stay higher for longer. A more cautious and tactical approach is favored as earnings season gets underway.”

Elsewhere, the Japanese yen remained under pressure, after surging to a new 34-year low against the dollar overnight. The increasing risk that authorities in Tokyo may intervene in the market to stem the drop still lingers, after Japan’s finance minister warned that he’s ready to take all available measures in the foreign exchange market if needed.

Emerging Asian currencies, including South Korea’s won and Malaysia’s ringgit, fell on the back of a stronger dollar.

Fear Gauge

Volatility perked up, with the premium for one-month put options to protect against a pullback in US equities hitting the highest since October. Wall Street’s “fear gauge” — the VIX — hit levels unseen this year. The S&P 500 broke below 5,100, dropping to the lowest in almost two months. The tech-heavy Nasdaq 100 slid over 1.5%. Both gauges breached their 50-day moving averages — seen as a bearish signal by several chartists. Banks outperformed on a surprise profit from Goldman Sachs Group Inc.

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Treasury 10-year yields spiked on Monday, while those on two-year notes came close to 5%. Bonds were also under pressure as JPMorgan Chase & Co. and Wells Fargo & Co. tapped the US high-grade bond market, the first in a likely parade of bond sales from banks after results.

US retail sales rose by more than forecast in March and the prior month was revised higher, showcasing resilient consumer demand that keeps fueling a surprisingly strong economy. As long as a robust labor market supports household demand, there’s a risk that inflation will become entrenched.

“If the S&P 500 is going to avoid its first three-week losing streak since last September, investors will need to move past concerns that rate cuts will be delayed because of sticky inflation,” said Chris Larkin at E*Trade from Morgan Stanley. “In the near-term, that could come down to the tone set by the first full week of earnings season, but geopolitical tensions in the Middle East remain a wild card.”

In commodities, West Texas Intermediate advanced in Asia after reclaiming its $85 mark on Monday. Top Israeli military officials reiterated the country has no choice but to answer Iran’s weekend attack. Gold was steady in early trading.

Key events this week:

• China property prices, retail sales, industrial production, GDP, Tuesday

• Germany ZEW survey expectations, Tuesday

• US housing starts, industrial production, Tuesday

• Morgan Stanley, Bank of America earnings, Tuesday.

• Fed Vice Chair Philip Jefferson speaks, Tuesday

• BOE Governor Andrew Bailey speaks, Tuesday

• IMF publishes its latest world economic outlook, Tuesday

• Eurozone CPI, Wednesday

• Fed issues its Beige Book, Wednesday

• Cleveland Fed President Loretta Mester speaks, Wednesday

• Fed Governor Michelle Bowman speaks, Wednesday

• BOE Governor Andrew Bailey speaks, Wednesday

• Taiwan Semiconductor earnings, Thursday

• US Conf. Board leading index, existing home sales, initial jobless claims, Thursday

• Fed Governor Michelle Bowman speaks, Thursday

• New York Fed President John Williams speaks, Thursday

• Atlanta Fed President Raphael Bostic speaks, Thursday

• BOE Deputy Governor Dave Ramsden and ECB Governing Council member Joachim Nagel speak, Friday

• Chicago Fed President Austan Goolsbee speaks, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.1% as of 10:11 a.m. Tokyo time

• Hang Seng futures fell 1%

• Nikkei 225 futures (OSE) fell 1.7%

• Japan’s Topix fell 1.4%

• Australia’s S&P/ASX 200 fell 1.4%

• Euro Stoxx 50 futures fell 0.9%

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%

• The euro fell 0.1% to $1.0613

• The Japanese yen was little changed at 154.33 per dollar

• The offshore yuan was little changed at 7.2613 per dollar

• The Australian dollar fell 0.3% to $0.6421

Cryptocurrencies

• Bitcoin rose 0.5% to $63,494.6

• Ether rose 0.3% to $3,094.01

Bonds

• The yield on 10-year Treasuries was little changed at 4.60%

• Japan’s 10-year yield advanced 1.5 basis points to 0.870%

• Australia’s 10-year yield advanced four basis points to 4.30%

Commodities

This story was produced with the assistance of Bloomberg Automation.

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