TOKYO (Reuters) – Concerns over rising US bond yields hit global equities on Thursday as investors waited to see if Federal Reserve Chairman Jerome Powell would address concerns about the risk of ‘a rapid rise in long-term debt costs.
The spectrum of higher U.S. bond yields also undermined safe-haven and low-yield safe-haven assets such as the yen, Swiss franc and gold.
The US Treasury 10-year benchmark rose to 1.447% as investors bet that US inflation could rise as the economic recovery is achieved, driven by government stimulus and progress in vaccination programs.
“It’s not clear how the Fed wants to deal with bond yields,” said Hirokazu Kabeya, Daiwa Securities’ top global strategist.
“The pace of rising yields has been much faster than most people expected and it is speculated that the authorities could start thinking about tightening their policy.”
MSCI’s former Asian-Pacific Japanese shares lost 1.7% in early business, while Japan’s Nikkei fell 1.9%.
E-mini S&P futures fell 0.4%, while Nasdaq futures, the unequivocal leader in post-pandemic concentration, fell 0.6% to a two-month low.
Technology stocks are vulnerable because their high valuation has been backed by expectations of a prolonged period of low interest rates.
Powell will have to speak at 12:05 pm EST (1705 GMT). Many Fed officials have downplayed the rise in Treasury yields in recent days, although Fed Governor Lael Brainard on Tuesday acknowledged concern about the possibility that a rapid rise in yields could dampen economic activity .
The market will have to contend with a huge increase in debt sales after rounds of stimulus to deal with a recession caused by the pandemic.
The issue is not limited to the United States, with a 10-year yield on the UK Gilts returning to 0.779%, close to the 11-month high of 0.836% reached last week, after the government revealed the much higher loans.
Currency investors continued to make dollars by betting on an American economy that surpassed its peers in the developed world in the coming months. [USD/]
The dollar rose to a seven-month high of 107.16 yen.
“The US dollar / yen has been on a one-way trajectory since early 2021,” said Joseph Capurso, head of international economics at the Commonwealth Bank of Australia.
“The brighter outlook for the world economy is positive for both the US dollar and the Australian dollar.”
Other safe haven currencies were soft, with the Swiss franc flirting with a minimum of four months against the dollar and a minimum of 20 months against the euro.
Gold hit a nine-month low of $ 1,702.8 an ounce on Wednesday and eventually stood at $ 1,711.5.
The other major currencies moved little, with the euro flat at $ 1.2054.
Investors ’focus on a U.S. economic rebound was not shaken by data released overnight that showed the U.S. labor market was in trouble in February, when private payrolls rose less than expected.
Oil prices rose for a second straight session early Thursday, as the possibility that OPEC + producers might decide not to increase production at a key meeting later in the day was grounded along with a drop in inventories. American fuel. [O/R]
US crude rose 0.3% to $ 61.44 a barrel.
Additional reports from Koh Gui Qing in New York; Edited by Sam Holmes and Richard Pullin