Asian shares extended losses for the week, U.S. Treasury yields climbed and the greenback hovered near two-month highs on Friday as investors digested comments from the U.S. Federal Reserve projecting rate hikes in 2023.

While the Fed messaging indicated no clear end to supportive policy measures such as bond buying, signals of faster-than-expected rate hikes indicated its concern about inflation as the U.S. economy recovers from the COVID-19 pandemic.

“What is pretty obvious is that the inflation genie is starting to sneak out of the bottle, and that will be a major driver of interest rates in the short to medium term,” said James McGlew, executive director of corporate stockbroking at Argonaut in Perth.

MSCI’s broadest index of Asia-Pacific shares outside Japan gave up early gains to dip 0.22%, extending declines into a fifth session.

Chinese blue-chip A shares fell 0.36% and Taiwan shares lost 0.22%, but Hong Kong’s Hang Seng index rose 0.49% and Seoul’s KOSPI was up 0.13%.

Japan’s Nikkei was flat.

Gold prices, which plunged following the Fed comments on Wednesday, edged higher but were still set for their worst week since March 2020. Spot gold was last up 0.57% at $1,783.45 per ounce. [GOL/]

Adding to indications of a continued rebound in the world’s largest economy, new U.S. data on Thursday showed growing factory activity and an easing in layoffs despite an unexpected rise in weekly jobless claims.

Hopes for a strong U.S. recovery pushed technology stocks higher on Thursday, lifting the Nasdaq Composite up 0.87%. But worries about inflation and higher rates weighed on the broader market, with the S&P 500 edging down 0.04%. The Dow Jones Industrial Average fell 0.62%.

“The Fed for a long time was sending a very strong signal that they were prioritising the labour market, and they want this broad, inclusive recovery and healing of the labour market and they’re going to run the economy red-hot to get there,” said Richard Franulovich, head of FX strategy at Westpac.

“Now … (inflation) is more of a priority. So that’s the big wake-up call for markets. A very big wake up call.”

Higher expectations of inflation continued to lift long-dated U.S. Treasury yields. Benchmark 10-year notes yielded 1.5141%, up from a close of 1.511% on Thursday.

The 30-year bond last yielded 2.0988%.

The dollar index climbed 0.09% to 91.958, not far off Thursday’s more than two-month peak of 92.010 following the Fed meeting. The dollar pulled back against the yen to 110.19, and the euro softened 0.08% to 1.1900.

Oil prices took a hit from the strong dollar as concerns over demand and new Iranian supply also weighed.

Global benchmark Brent crude was down 0.99% at $72.36 a barrel after settling at its highest price since April 2019 on Wednesday. U.S. West Texas Intermediate crude, which touched its highest level since October 2018 on Wednesday, shed 0.86% to $70.43