Market Update: Stocks in Japan rallied in catch up trade on their return from yesterday's holiday, but elsewhere the picture looked patchy overnight. The ASX lost -0.5% and Hang Seng and CSI 300 are up 0.37% and down -0.06% respectively, after a narrowly mixed close on Wall Street. European and U.S. futures are posting modest gains though. Treasury yields corrected -1.8 bp to 2.87%, but the curve inverted further as the short end underperformed also thanks to comments from Fed's Daly who told Bloomberg yesterday, that there is an improvement in inflaiton numbers, but victory, repeating that her base case is for a half-percentage point hike at the next meeting. Markets seem to be rethinking the global rate outlook and yields in Australia and to a lesser extend New Zealand backed up today. Bunds are also underperforming versus Treasuries in early trade, and the 10-year rate is up 2.1 bp at 0.987%. In FX markets the DXY dollar index lifted to 105.141, but is still heading for a weekly loss amid trimmed back expectations for the Fed's tightening path. The front end WTI future meanwhile is at USD 93.90, Brent at USD 99.22 per barrel, after the IEA upgraded its demand outlook yesterday.

Says long way from evaluating risks of not pulling back on tightening; Says the main risk in the economy is that inflation is too high; Says another tightening of 50bps makes sense to me right now, but have open mind on 75bps hike in September. Says looking at job openings and quit rate in addition to unemployment rate; Says will take some time for home rental inflation to level off; Says if services inflation continues to rise, we still have a lot of work to do; Says about 100bps increase before the end of 2022 looks right for now; Says will raise rates to a level appropriate and then hold them there for a while. Comments from Bloomberg TV interview.