SYDNEY (Reuters) – Asian equities stopped breathing on Monday, while Treasury yields were at 10-month highs as “trillions” of new US fiscal stimulus plans were announced this week, fueling global trade. of reflection.
Investors were eyeing U.S. policy as pressure for President Donald Trump’s impeachment grew, although signs that a real trial would still take some time.
The broader MSCI index for Asia Pacific stocks outside Japan fell 0.2%, rising 5% last week to record highs. Japan’s Nikkei was on vacation after closing the maximum at 30 on Friday.
South Korea fell after an initial jump, and Chinese blue chips stood at 0.7%.
“Asia has overcome the second global crisis of this millennium with its credentials,” said ANZ chief economist Richard Yetsenga.
“Asia’s growth is stronger, mostly with better demographics and debt levels than advanced economies.”
He noted a turnaround in fortunes between the semiconductor and energy sectors, highlighting Asia’s success, as the region produced about 45% of the world’s semiconductors.
“For the first time, the market capitalization of the global semiconductor sector has surpassed energy,” he said. “At the time of the last crisis, 12 years ago, the energy sector was more than five times larger.”
S&P 500 futures fell 0.6% from all-time highs after gaining 1.8% last week. EUROSTOXX 50 futures declined 0.1% and FTSE futures were stable.
The Treasury’s long-term earnings have been at their highest levels since March, after Friday’s weak jobs report only fueled speculation about further US fiscal stimulus, now that Democrats have control of the government.
President-elect Joe Biden is expected to announce plans for “trillions” of new relief bills this week, many of which will be paid for by larger loans.
At the same time, the Federal Reserve seems happy to place the burden on fiscal policy, with Vice President Richard Clarida saying there would be no changes soon in the $ 120 billion in debt the Fed is buying each month.
With the Fed reluctant to buy longer-term bonds, 10-year Treasury yields jumped nearly 20 basis points last week to 1.12%, the biggest weekly increase since June.
Treasury futures lost 3 more ticks on Monday morning.
Mark Cabana of BofA warned that the stimulus could put further pressure on the dollar and cause the Fed’s gradual reduction to begin later this year.
“An early Fed reduction creates upside risks to our 10-year Treasury target of 1.5% at the end of the year and supports our long-term expectations for neutral rates moving to 3%,” he said in a note to customers. .
The low payroll report will increase interest in US data on inflation, retail sales and consumer sentiment.
The gains will also be in focus, as JP Morgan, Citigroup and Wells Fargo are among the first companies to release fourth quarter results on January 15.
The rise in yields, in turn, offered some support for the bearish dollar, which had risen to 90.439 against a currency basket since last week’s low of 89.206.
The euro retreated to $ 1.2170 from a recent $ 1.2349 top, breaking support around $ 1.2190. The dollar also strengthened to 104.18 yen, from a 102.57 low hit last week.
The sudden increase in bond yields hurt gold, which pays no interest, and the metal fell 1.1%, to $ 1,828 an ounce, from its recent peak of $ 1,959. [GOL/]
Oil prices hit profit after reaching the highest level in almost a year on Friday, rising 8% in the week after Saudi Arabia pledged to cut production. [O/R]
Brent crude futures fell 48 cents to $ 55.51, while American crude futures lost 28 cents to $ 51.96 a barrel.