Yields on Treasuries climbed across tenors in Asia following Fed governor Christopher Waller’s remarks after the close on Wednesday that there is no rush to lower interest rates, and he wants to see “at least a couple months of better inflation data” before cutting. Two-year Treasury yields, which are more sensitive to policy moves, rose more than four basis points. The dollar strengthened against most of its G10 peers.

“We believe that the current market easing expectations for the Fed still need to adjust,” Win Thin and Elias Haddad, strategists at Brown Brothers Harriman, wrote in a note. “When they do, the dollar should gain even further.” 

An Asia-Pacific equity gauge declined, with Japanese shares the worst performers as they traded ex-dividend. The move also came after the Nikkei 225 index Wednesday advanced to near its record high. Meanwhile, Australian stocks climbed to a fresh record. Hong Kong and mainland Chinese shares rose.

Shares of Hon Hai Precision Industry Co. — which makes iPhones for Apple Inc. — soared as artificial-intelligence mania outweighed concerns over a sluggish recovery in the smartphone sector.

Contracts for US equities were flat in Asian trading after the S&P 500 closed at a record, with many institutional investors potentially rebalancing their portfolios. Thursday is the last trading day of the quarter in some markets.

In Asia, the yen remains in focus. The currency steadied in early trading after pulling back from the lowest level since 1990. The yen had weakened to 151.97, beyond the level at which policymakers stepped in during October 2022. 

A summary of opinions from the Bank of Japan’s policy meeting last week shows that officials discussed the need to stay cautious in their approach toward further interest rate hikes. 

“Market perception is they have drawn a line in the sand at 152,” said Paresh Upadhyaya, director of fixed income and currency strategy at Amundi Asset Management US. “The key question is their commitment.”

Investors will be monitoring a slew of earnings by Chinese banks later Thursday. Chinese stocks already erased their gains for March as earnings disappointments weighed down sentiment, fueling concern that more of the policy-driven rally will unwind.

In commodities, oil climbed to head for a solid quarterly gain on expectations OPEC+ supply cuts would tighten the global market. Gold steadied on Thursday after three sessions of gains.

The US government’s credit score was affirmed by S&P Global Ratings at AA+, even as the country continues to face fiscal challenges. “Bipartisan cooperation to strengthen the US fiscal profile — namely to meaningfully lower deficits and tackle budgetary rigidities — remains elusive,” S&P said in a statement.

Meanwhile, after the S&P 500 soared about 25% since late October, many have flagged concern that positioning is stretched and stocks are more vulnerable to short-term profit taking. JPMorgan Chase & Co.’s Dubravko Lakos-Bujas warned clients on Wednesday that they could be “stuck on the wrong side” of the momentum trade when it eventually falters.