April 11 (Reuters) - A look at the day ahead in Asian markets.

Asia's equity and bond markets on Thursday get their first chance to react to Wednesday's sizzling U.S. inflation report, and all the signs are investors should hold on to their hats.

U.S. inflation last month was only incrementally higher than economists had expected but the immediate impact on markets was seismic - Fed rate cut expectations were slashed, stocks tumbled, and bond yields and the dollar soared.

The moves in the dollar and Treasury yields, in particular, are an aggressive tightening of financial conditions for corporate and sovereign borrowers in emerging markets, and Asian markets will feel the squeeze on Thursday.

Perhaps most eye-catching of all, from an Asian market perspective, was the Japanese yen's plunge to a new 34-year low against the dollar. Not only that, the yen also hit its weakest level in over 30 years against the Chinese yuan.

Currency traders will be on ultra-high alert for yen-buying intervention from Japanese authorities, although it is fair to say the latest rise in dollar/yen is being driven by exploding U.S. yields and blow-out in U.S.-Japan yield spreads.

Fundamentals, in other words.

On the other side of the yuan/yen equation, meanwhile, authorities in Beijing are unlikely to be happy with the competitive advantage Japan is gaining over China from the bilateral exchange rate.

Beijing will also be bristling over ratings agency Fitch's decision to lower the outlook on China's sovereign credit rating to negative. Fitch also cut its growth forecasts for China, while raising its debt and deficit projections.

In other gloomy China ratings news, S&P Global on Wednesday dealt the battered property sector a further blow as it slashed developer China Vanke's credit rating to junk. S&P cut the rating of the country's second biggest developer by sales by a hefty three notches to BB+ from BBB+.

On the geopolitical front, U.S. President Joe Biden and Japanese Prime Minister Fumio Kishida on Wednesday touted increased joint military cooperation and a new missile defense system, in what looks like a united front against China and Russia.

Investors' attention on Thursday turns to China, with Beijing scheduled to release producer and consumer price inflation figures for March.

Factory gate prices have been in outright deflation, on a year-on-year basis, since October 2022, and annual consumer price inflation has been mostly negative for almost a year.

The annual PPI rate is expected to have declined to -2.8% from -2.7%, according to a Reuters poll. Annual CPI inflation is expected to have cooled to 0.54% from 0.7%, while consumer prices are expected to have fallen by 0.5% on the month.

If accurate, these figures show deflationary pressures still loom large over the Chinese economy, pointing to over capacity or lackluster demand. Or a bit of both.

Here are key developments that could provide more direction to markets on Thursday:

- China producer price inflation (March)

- China consumer price inflation (March)

- Philippines trade (February)

(By Jamie McGeever;)