Treasury Yields Edge Higher as Asian Stocks Drop: Markets Wrap

Publikuota: 2018-04-23
Juditos Grigelytės (VŽ) nuotr.
Juditos Grigelytės (VŽ) nuotr.
 

The 10-year Treasury yield touched above 2.97 percent and the dollar held last week’s advance, while stocks in Asia were mostly lower as investors continued to assess the outlook for trade discussions and geopolitical tensions.

The MSCI Asia Pacific Index of stocks declined, with technology companies among the worst performers after a sell-off in their U.S. counterparts on Friday. Equities struggled to find direction through most of the Asian session, while S&P 500 Index and FTSE 100 Index futures advanced. The yen dropped against the dollar, at the start of a week that sees earnings season ramping up and a slew of economic data from Japan to the U.S. Australian and Japanese bond yields climbed, matching rises in the U.S.

“Some of the dialing down in tensions, in risk aversion, may be having some impact there as well as expectations of continued strong growth in the U.S.,” Mitul Kotecha, a strategist at TD Securities, told Bloomberg TV from Singapore. “Ultimately it’s hard to see a move sustained above 3 percent on the U.S. 10 year.”

With trade dominating discussions at the IMF gathering in Washington, the spat between the U.S. and China, along with mounting debt, were cited as threats to the global growth outlook. Treasury Secretary Steve Mnuchin said he’s “cautiously optimistic” on reaching an agreement that bridges the differences of the world’s two-largest economies. Meanwhile, there are signs geopolitical tensions on the Korean peninsula are easing after Kim Jong Un said he would suspend further tests of atomic bombs and intercontinental ballistic missiles.

Elsewhere, oil drifted below $69 a barrel after rising for a second week on a commitment from OPEC to rebalance the market. Gold edged lower.

These are some important events coming up this week:

French President Emmanuel Macron begins a three-day visit to the U.S. Monday U.S. manufacturing and services sector PMIs. Later this week’s GDP and jobless claims. Earnings season continues. Among those reporting: Alphabet/Google, Microsoft, Amazon.com, Twitter, Samsung, Facebook, SAP, Sony, Caterpillar, Halliburton, Airbus, Daimler, Honda, Deutsche Bank, Barclays, Credit Suisse, UBS, Visa, Nomura, Bank of China, Vale, Statoil, Royal Dutch Shell, Barrick Gold, Total, Exxon Mobil and Chevron. European Central Bank has a rate decision on Thursday. While no change to interest rates or the pace of asset purchases is expected, investors will watch for any sign that officials are preparing a shift in stimulus plans for their June meeting. Bank of Japan announces its latest policy decision Friday and releases a quarterly outlook report.

Here are the main moves in markets: Stocks

The MSCI Asia Pacific Index fell 0.3 percent as of 3:01 p.m. Tokyo time. Topix index ended little changed. Hong Kong’s Hang Seng Index fell 0.5 percent. The Shanghai Composite Index lost 0.8 percent. Kospi index fell 0.3 percent. Australia’s S&P/ASX 200 Index increased 0.3 percent. Futures on the S&P 500 Index rose 0.2 percent. FTSE 100 Index futures climbed 0.2 percent as of 7:02 a.m. in London.

Currencies

The Bloomberg Dollar Spot Index rose less than 0.1 percent. The Japanese yen fell 0.1 percent to 107.80 per dollar. The euro fell 0.1 percent to $1.2271. The pound gained 0.1 percent to $1.4018.

Bonds

The yield on 10-year Treasuries rose as high as 2.9770 percent before holding at 2.9658 percent. Japan’s 10-year yield rose one basis point to 0.065 percent. Australia’s 10-year yield gained five basis points to 2.86 percent. Germany’s 10-year bund yield increased three basis points to 0.62 percent.

Commodities

West Texas Intermediate crude fell 0.1 percent to $68.33 a barrel. Gold fell 0.2 percent to $1,334.05 an ounce. LME copper rose 0.4 percent to $7,017.00 per metric ton.

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