Stocks in Asia rose Wednesday after gains in US equities and as a pullback in bond yields provided some respite for investors fretting that higher rates will slow down growth.

An MSCI Inc. gauge of Asia-Pacific shares advanced led by Hong Kong and Japan. China was little changed. US futures slipped after the S&P 500 wiped out last week’s losses with back-to-back advances and the tech-heavy Nasdaq 100 also climbed.

Treasury yields edged higher. The long end of the Treasury curve led a rally, pushing 10-year yields below the 3% level and flattening the curve as Target Corp.’s latest profit forecast underscored a grim outlook for US consumer spending. Shorter-dated maturities lagged, weighed by weak demand at an auction. A dollar gauge rose, while the yen dipped further after sliding to a 20-year low.

The Bloomberg Commodity Spot Index, which tracks prices for raw materials, is at a record high. The move has been mostly driven by a jump in futures contracts for oil and soybeans amid renewed supply fears. The gauge has climbed 36% this year.

Markets continue to be whipsawed as sentiment remains fragile with investors worrying interest rates will need to go much higher to rein in inflation and in turn stifle growth. Traders are looking to the US consumer prices reading for May due Friday to discern the Federal Reserve’s rate path and whether it will continue to hike in 50-basis point increments.

“Figuring out the direction over the next couple of months becomes increasingly difficult,” Kate Moore, head of thematic strategy for global allocation at BlackRock Inc., said on Bloomberg Television. “There seems to be across all of the investing segments a lack of strong conviction in the direction of the market. We are going to see a lot more investors remain on the sidelines, remain cautiously positioned.”

Feeling Uncomfortable
The World Bank cut its forecast for global economic expansion in 2022 further, warning that several years of above-average inflation and below-average growth lie ahead.

While not expecting a recession this year, the “risk has increased and you’ve see that discounted in stock prices,” Erin Browne, Pacific Investment Management Co. multi-asset strategies portfolio manager, said on Bloomberg Radio. “When you look at the global growth backdrop, it’s certainly slowing and it’s slowing from very high levels and it’s going to feel uncomfortable.” This late in the cycle, volatility is going to rise and expected returns across asset classes will fall, she added.

The European Central Bank on Thursday is set to end trillions of euros of asset purchases and cement a path to exiting eight years of negative interest rates.