TOKYO (Reuters) – Recovery concerns about rising U.S. bond yields hit global shares on Thursday as investors waited to see if Federal Reserve Chairman Jerome Powell addressed concerns about the risk of a rapid rise in costs long-term loan.
Higher U.S. bond yields also weakened low-yield, safe-haven assets, such as the yen, Swiss francs and gold.
The U.S. 10-year benchmark stock rose to 1.477%, going back towards a year-high of 1.614% set last week on a bet on a strong economic recovery backed by stimulus government and progress in immunization programs.
“It is not clear how the Fed wants to handle bond yields,” said Hirokazu Kabeya, chief global strategist at Daiwa Securities.
“The pace of increase in output has been much faster than most expected and it is profitable for the authorities to start thinking about tightening their policy. ”
Euro Stoxx 50 futures fell 0.9% while British FTSE futures were down 0.5% lower.
Japan’s MSCI Asian-Pacific shares lost 1.8% in early trading while Japan’s Nikkei fell 2.2%.
E-mini S&P futures slipped 0.4% while futures for Nasdaq, the obscure leader of the post-pandemic rally, fell 0.7%, hitting a two-month low.
Technical sections are vulnerable because their high valuation has been supported by long-term expectations of low interest rates.
But the market is targeting a laser for Powell, who is due to speak at a Wall Street Journal conference at 12:05 pm EST (1705 GMT), in his last round before the Fed’s 16 policy-making committee called March- 17.
Many Fed officials have downplayed the rise in Treasury yields in recent days, although Fed Governor Lael Brainard on Tuesday acknowledged concerns about the potential for a rapid rise in economic activity output.
In addition, concerns are raised over an upcoming regulatory change in a rule known as the supplementary leverage ratio, or SLR, which could make it more expensive for banks to hold bonds.
“The market is likely to be volatile until this regulatory issue is resolved,” said Masahiko Loo, portfolio manager at AllianceBernstein. “There are no people who want to catch a falling knife when market volatility is so high. ”
In addition, the market needs to cope with a sharp rise in debt sales following stimulus rounds to deal with the recession caused by the pandemic.
The case is not limited to the United States, with UK Gilts 10-year yields jumping back to 0.779%, close to the 11-month high of 0.836% hit last week, after the government announced much higher borrowing.
Investors kept money going up dollars while betting on the U.S. economy outperforming peers in the developed world in the coming months. [FRX/]
The dollar rose to a seven-month high of 107.16 yen.
“The U.S. dollar / yen has been on a one-way path since the beginning of 2021,” said Joseph Capurso, head of international economics at the Commonwealth Bank of Australia.
“The outlook for the world economy is positive for the US dollar / yen and the Australian dollar / yen.”
Other safe-haven currencies were soft, with the Swiss franc courting a four-month low against the dollar and a 20-month volatility against the euro.
Gold hit a nine-month low of $ 1,702.8 per ounce Wednesday and finally stood at $ 1,719.
Not many other major currencies were moved, with the euro flat at $ 1.2054.
Investors ’focus on the U.S. economic reversal was shattered by data released overnight that showed the U.S. labor market struggled in February, when private payments rose lower than before. expectation.
Oil prices rose for a second session just early on Thursday, as there may be potential for OPEC + representatives to decide not to increase output at a key meeting later in the day in support of a fall in US fuel investments. [O/R]
US crude rose 0.6% to $ 61.64 per barrel.
Further statement by Koh Gui Qing in New York; Edited by Sam Holmes, Richard Pullin & Simon Cameron-Moore