TOKYO, Nov.11 (Reuters) – Inflation fears put pressure on Asian stocks and supported the dollar on Thursday after overnight data showed U.S. consumer prices rose at the fastest pace since 1990 last month, strengthening the case for faster Federal Reserve policy tightening.

Nominal US Treasury yields have skyrocketed, with the 10-year benchmark bond yielding the most since February, while real yields, which take inflation into account, plunged to record highs.

Gold hit a five-month high and bitcoin hit a record high as investors sought hedges against inflation.

Oil fell sharply from highs nearly seven years after US President Joe Biden said his administration was looking for ways to cut energy costs.

The largest MSCI Asia-Pacific equity index outside of Japan (.MIAPJ0000PUS) fell 0.85%, led by a 1.19% decline in the Australian benchmark (.AXJO).

Chinese blue chips (.CSI300) slipped 0.09%.

The Japanese Nikkei (.N225) reversed the trend rising 0.24%, supported by the weakness of the yen against a rising dollar and as US equity futures edged higher.

Overnight, the S&P 500 (.SPX) fell 0.82%, its worst day in more than a month. This marked the first consecutive declines in a month, after the index closed at a record high to start the week.

The dollar index, which values ​​the currency against six major peers including the yen and the euro, hovered just below Wednesday’s high of 94.905, a level not seen since July of last year.

The greenback gained 0.13% to 114.04 yen, against 112.73 at the start of the week.

The consumer price index in the United States jumped 6.2% on an annual basis, with gasoline leading a widespread increase that added to signs that inflation could remain uncomfortably high until 2022 amid the booming global supply chains. Read more

Inflationary pressures are brewing in the labor market as well, with other data showing Wednesday that the number of Americans filing for unemployment benefits fell to its lowest level in 20 months.

The White House and the Fed have maintained that prices will fall once bottlenecks begin to ease, with the central bank only reiterating last week that high inflation should “be transient”, policymakers policies urging patience.

“The Fed’s resolve faces a period of testing,” Rodrigo Catril, senior forex strategist at National Australia Bank in Sydney, wrote in a client note.

“The supply constraints may well turn out to be transient, but the rise in core engines increases the pressure on the Fed to trigger a monetary policy response.”

The money market is now anticipating a first Fed interest rate hike by July.

Benchmark 10-year Treasury yields rose the most in seven weeks to 1.592% on Wednesday. The Treasury Market is closed globally on Thursday for a public holiday in the United States.

Meanwhile, the yield on 10-year Inflation-Protected Treasury Securities (TIPS) fell sharply to an all-time high of -1.243% before rising higher during the session.

Inflation expectations have skyrocketed, with five-year breakeven inflation hitting a record 3.113%

The volatility spilled over to other markets, with the CBOE Volatility Index (.VIX), Wall Street’s so-called fear gauge, reaching its highest level in nearly a month.

Spot gold traded around $ 1,850 after climbing to $ 1,868.20 overnight for the first time since mid-June.

Bitcoin first hit a new high of $ 69,000 before falling back to the last trade just below $ 65,000.

U.S. West Texas Intermediate (WTI) crude rose 25 cents to $ 81.59 a barrel, but nowhere near the overnight high of $ 84.97 and the seven-year high of $ 85.41 reached at the end of the month latest.

Brent crude futures rose 30 cents to $ 82.94 a barrel, but down from $ 85.50 on Wednesday and October’s three-year high of $ 86.70.

Editing by Lincoln Feast

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