Asian Stocks Waver as Treasury Yields Hold Steady: Markets Wrap

Asian Stocks Waver as Treasury Yields Hold Steady: Markets Wrap
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Emily Barrett
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(Bloomberg) -- Asian stocks fluctuated after U.S. peers rose, and bond yields held a decline ahead of a series of closely watched Treasury auctions.

Shares in China and Hong Kong edged lower, while gains for equity indexes in Japan and Australia buoyed the MSCI Asia Pacific gauge. U.S. futures swung between red and green after rallying technology shares drove the Nasdaq 100 up 1.7%, and the S&P 500 Index also gained. Small-cap shares underperformed.

The 10-year U.S. Treasury yield eased from its highest in about 14 months, stirring hopes of improved demand in the lead-up to a heavy round of sales. This week’s offerings include a seven-year note, a maturity that fared poorly in last month’s auction, sending benchmark yields sharply higher. Oil prices slipped and the dollar was steady.

The stabilization in bond yields provided some relief for investors fretting that heavy U.S. spending on the recovery could reignite inflation and force tighter central-bank policy. The Biden administration is considering a multi-trillion dollar economic plan to follow the stimulus package signed earlier this month. But encouraging economic data shouldn’t distract from the progress still to be made, Treasury Secretary Janet Yellen emphasized in prepared remarks for her Congressional testimony.

The Federal Reserve will continue to support the U.S. economy for as long as it takes, Chairman Jerome Powell noted in a speech for his appearance alongside Yellen on Tuesday.

“The rotation we see day-to-day at the moment is driven by that volatility in Treasury yields -- when yields go up we see tech sell off and a rotation into value,” said Isaac Poole, global chief investment officer for Oreana Portfolio Advisory Services. “That is fairly normal in early cycle, in the uncertainty around monetary policy.”

Poole told Bloomberg TV he sees long dated yields breaching 2% this year, and value stocks benefiting.

Elsewhere, New Zealand’s dollar fell against major currencies after the government took steps to rein in surging property prices by removing tax incentives for investors. Bitcoin

These are some key events to watch this week:

Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen are expected to make their first joint appearance before the U.S. House Financial Services committee to testify on Fed and Treasury pandemic policies Tuesday.The U.S. Treasury holds auctions of two-, five- and seven-year debt.EIA crude oil inventory report on Wednesday.On Friday, February U.S. personal income and spending data arrives.

These are some of the main moves in financial markets:

Stocks

S&P 500 futures were steady as of 10:50 a.m. in Tokyo. The index rose 0.7% Monday.Nasdaq 100 futures edged lower after a 1.7% gain Monday.Japan’s Topix Index rose 0.5%.Australia’s S&P/ASX 200 Index climbed 0.2%.South Korea’s Kospi dipped 0.1%.

Currencies

The yen was steady at 108.79 per dollar.The Bloomberg Dollar Spot Index was little changed.The euro was steady at $1.1935.The Australian dollar fell 0.3% to 77.26 U.S. cents.

Bonds

The yield on 10-year Treasuries held around 1.69%.

Commodities

Gold slipped 0.3% to $1,734 an ounce.West Texas Intermediate crude fell 1.1% to $60.91 a barrel.

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©2021 Bloomberg L.P.

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