Strong Dollar and Weaker Asian FX with Hotter Than Expected US CPI

Stronger-than-expected US inflation and rising oil prices due to Iran tensions have triggered a sell-off in bonds and pressured Asian FX. Major currencies like IDR have hit all-time lows against the dollar while regional equity markets like the Kospi face domestic policy volatility.

Key Takeaways

• 1.Hotter-than-expected US April CPI (3.8% y/y) and energy price surges have spiked US Treasury yields, with the 10-year reaching 4.46%.
• 2.Asian currencies, particularly PHP, INR, and IDR, are under severe pressure due to their sensitivity to oil prices and higher US rates; USD/IDR has hit all-time highs.
• 3.South Korean markets experienced high volatility after a proposal for a 'citizen dividend' funded by AI profit taxes rattled major tech stocks like Samsung and SK Hynix.

Table of Contents

• Market Highlights
• MUFG Bank, Ltd.
• CHART 1: US RATES MARKETS ARE NOW PRICING IN A RATE HIKE BY MID 2027
• Ahead Today
• INDICATIVE RATES 12-May-2026
• FOREIGN EXCHANGE
• CERTIFICATION
• DISCLAIMERS
• Legal entities and branches
• General disclosures
• Country and region specific disclosures

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