(Bloomberg) — Asian stocks fell to the lowest level in almost two months on concerns that US President-elect Donald Trump’s proposed tariffs and picks for key administration positions may stoke inflation.

Most Read from Bloomberg

Equity benchmarks fell in China, Japan and Australia, with a regional gauge touching the lowest since Sept. 19. The Bloomberg Dollar Spot Index was steady ahead of a report on US consumer-price inflation, while the yen approached the key level of 155. The MSCI Emerging Markets Currency Index was close to erasing its gains for the year.

Treasury 10-year yields slipped after surging 12 basis points on Tuesday. Traders are now pricing in about two US rate cuts through June, against almost four seen at the start of last week. US stock futures slipped.

Asian equities have been under pressure since Trump won the election last week, as traders expect his proposed policies to further drive up inflation and slow the pace of interest-rate cuts. US data due Wednesday may reinforce the narrative, with analysts predicting that the overall consumer price index probably increased 0.2% for a fourth month.

Chinese stocks continued to retreat after slumping on Tuesday following reports that Trump was poised to pick two men with track records of harshly criticizing Beijing for key posts in his administration.

“While focus remains on Trump 2.0, there has been a slight tilt toward tariff fears which are overpowering the expectations of tax cuts given the announcements of China hawks being elevated to key positions in Trump’s cabinets,” said Charu Chanana, chief investment strategist at Saxo Markets.

Meanwhile, China indicated its discomfort with yuan weakness through its daily reference rate for the currency amid the threat of higher US tariffs under a Trump administration. The yuan edged higher following the move.

Beijing started marketing dollar bonds in Saudi Arabia, marking the country’s first debt sale in the US currency since 2021.

Traders are betting on further losses in Treasuries in anticipation that Trump’s planned policies will rekindle inflation and keep US interest rates high. Open interest, an indication of futures traders’ positioning in the bond market, rose for a fourth straight session in the two-year note contract, data released Tuesday show.

Fed Minneapolis President Neel Kashkari on Tuesday said he’ll be watching the inflation data closely to determine whether another interest-rate cut is appropriate at the US central bank’s December meeting.

Story Continues