Asian shares on edge as U.S. bond yields rise, oil volatile

Hong Kong, Nov. 24 (BNA): Stock markets were nervous in early Asia on Wednesday as trade was hit by rising US Treasury yields as well as volatile oil prices in the face of price-cooling moves by the United States. and other countries.

MSCI’s broadest index of Asia Pacific shares outside Japan fell 0.24%, while the benchmark stock price index in Japan fell 1.13%, returning from holiday and dealing with global declines the day before.

Oil settled a day after rising 3% to a one-week high, even after the United States said it would release millions of barrels from strategic reserves in coordination with China, India, South Korea, Japan and Britain to try to cool prices afterward. Reuters reported that repeated calls for more crude failed to impress OPEC+ producers.

Brent crude futures reversed early losses, rising 0.15 percent to $82.43 a barrel, and US crude futures rose 0.33 percent to $78.76 a barrel.

“There is a lot going on at the moment,” said Carlos Casanova, a leading Asia economist at Swiss private bank UBP.

“10-year yields are going up, the US dollar is strong, which is a bit of a nuisance for the Asian markets as a lot of currencies (except for the Chinese yuan) will fall and there will be some outflows on the back of real widening spreads.”

However, he said, “Chinese asset classes have held up relatively well,” attributing the strength to the People’s Bank of China removing several hawkish signals from its quarterly monetary policy support on Friday, pointing to central bank support later this year or in Early next year. “It will provide a floor for stocks.”

China’s blue-chip stocks recently settled down 0.1% and are up about 0.5% so far this week, versus a decline of nearly 1% this week in the Asian regional benchmark. Hong Kong shares lost 0.1%.

Overnight, yields on US 10-year Treasuries rose more than 5 basis points to 1.684% while yields on 30-year Treasuries gained 6 basis points. US two-year Treasury yields fell after touching their highest level since March 2020 on Monday.

“There is a risk that the Fed will accelerate tapering (the bond-buying stimulus program) and that in turn means the tightening timetable may be brought forward, contributing to a stronger dollar,” said Sim Moh-Seong, currency strategist at Bank of Bank of Bank, Inc. “. Singapore.

Investors will be looking at the minutes of the US Federal Policy Committee’s November meeting to be published later in the day for signs that the tapering pace could accelerate.

The non-interest bearing gold that reacted poorly to higher Treasury yields recovered a bit. The spot was last at $1,794, up 0.2% but still close to Tuesday’s two-week low.

Major currencies are largely traded based on market expectations of central bank interest rate normalization schedules.

New Zealand’s central bank raised interest rates for the second time in several months on Wednesday, driven by rising inflationary pressure and the easing of restrictions imposed by the coronavirus that has supported economic activity.

However, with markets open to the prospect of an even bigger rally, the New Zealand dollar fluctuated in the news before closing marginally weaker at $0.6928.

Next on the agenda in Asia is the Bank of Korea (BOK), which is holding its policy meeting on Thursday.

All but one of the 30 economists polled by Reuters in a November 15-22 poll expected the Bank of Korea to raise its key interest rate (KROCRT = ECI) by 25 basis points to 1.00%, with the defector forecasting an even larger increase.

Other than that, currency markets paused for breath on Wednesday as the dollar largely held recent gains against most other currencies on the back of higher Treasury yields.

However, the dollar managed to rise slightly, reaching a four-and-a-half year high at 115.22 yen.

HF