(Bloomberg) — Stocks in Asia fell after US equities dropped for a second day and Treasuries slid as investors began to adjust for the prospect of higher interest rates as the Federal Reserve battles inflation.
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An Asia equity benchmark was headed for its second straight weekly fall as shares declined in China, Australia and South Korea. Futures on US equity contracts were also in the red after both the S&P 500 and the Nasdaq 100 dropped on Thursday. The picture was different in Japan, with stock gains supported by positive earnings from chipmakers.
Treasury yields continued their climbs across the curve after investors pushed yields on the two-year Treasury above the 10-year’s by the most since the early 1980s, a sign of flagging confidence in the economy’s ability to withstand additional Fed hikes.
Next week’s inflation update from the US offers a relevant potential inflection point in the Treasury yield curve, according to Benjamin Jeffery and Ian…
2023-02-09 23:40:51 Asia Stocks, US Bonds Fall as Rates Outlook Sours: Markets Wrap
Article from finance.yahoo.com
Asian stocks fell and US Treasuries declined on Tuesday, as investors weighed riskier assets after a continued decline in bond yields and US bond yields. Meanwhile, Federal Reserve Chairman Jerome Powell said the central bank’s ultra-loose monetary policy could continue to lift the economy even if inflation picks up.
The benchmark S&P/ASX 200 index in Australia fell 0.62%, while Japan’s Topix shed 1.48%. South Korea’s KOSPI finished the day down 0.45%. Hong Kong’s Hang Seng index bucked the trend, gaining 0.09%.
In the US, the 10- year Treasury yield declined to its lowest level since April, after Powell’s comments that there is still a ways to go for the recovery before the Fed will begin to scale back its accommodative policies. The yield on the benchmark 10-year note was last at 1.5710%, falling 3.4 basis points on the day. The yield on the 30-year bond also fell, declining 3.8 basis points to 2.2820%.
Investors remain cautious over the inflation outlook and the potential for tighter monetary policy from the Fed in the near term. A stronger read on US consumer prices in the last reading has raised concerns that the Fed could be forced to raise interest rates sooner than expected.
In a speech on Monday, Powell indicated that the central bank is not ready to make a judgment on whether inflation is hitting levels where tighter policy will be needed, though he also said that the Fed is “prepared to act” to support the recovery if necessary.
European stocks pared losses but remained lower on the day, with the Stoxx 600 slipping 0.1 percent. All of the regional bourses finished in the red, with Germany’s DAX falling 0.2%.
Wall Street stocks opened lower, with the S&P 500 dropping 0.8% in the first 30 minutes of trading, as investors weighed the prospects for higher inflation and the possibility of tighter monetary policy. The Dow Jones Industrial Average was also down 0.7%, while the Nasdaq Composite was 0.8% lower.
Overall, investors remain cautious after the recent drop in bond yields and the comments from Fed Chairman Powell. Although Asian stocks ended the day in the red, investors remain optimistic that the recent economic data will help to bolster the recovery from the pandemic-induced recession.
