Photographer: Burak Kara / Getty Images
Photographer: Burak Kara / Getty Images
Asian stocks are poised for a cautious start to the week, with investors worried about rising bond yields and inflation, rising economic activity. The Turkish lira plummeted after the president of the central bank was replaced.
US stock futures fell. Futures contracts fell in Japan and Australia and were higher in Hong Kong previously. THE Turkish Lira fell up to 15% at the beginning of Asian trade after President Recep Tayyip Erdogan removed the governor from the central bank after a larger than expected increase in interest rates. The dollar advanced against most Group 10 currencies.
The S&P 500 index fell lower on Friday. The financial sector weighed down the Dow Jones Industrial Average after the Federal Reserve allowed a capital shortfall for large banks to expire. The high-tech Nasdaq 100 bounced back from Thursday’s crash. Oil fell after its worst week since October.
A heavy treasury slate maturing auctions that recently suffered a beating will keep the bond market on the alert this week. Ten-year yields ended last week at over 1.7%, at the highest levels in about 14 months.
Investor concerns about the possibility of higher interest rates are dominating the stock and bond markets. Bond sales boosted higher yields and fueled a growth rotation for value stocks, on the view that recovering inflation may force the Fed to tighten monetary policy earlier than its current orientation suggests.
Fed President Jerome Powell reiterated in a Wall Street Journal editorial that the central bank will provide aid to the economy “for as long as it takes”.
“Clearly, the market is skeptical that the Fed will be able to keep interest rates at current levels for the next three years,” Diana Mousina, senior economist at multi-asset group of AMP Capital Investors Ltd., said in a note. “We believe that nominal bond yields may still skyrocket further in the short term toward 2% and above on inflation issues. Markets tend to be concerned that this change is permanent, rather than temporary. “
An exemption from the central bank that allowed creditors to load Treasury bills and deposits without reserving extra capital to cushion losses to expire March 31. The regulator also said that it will soon propose new changes to this supplementary leverage index, or SLR.
Meanwhile, the European Union is set to block exports of the AstraZeneca Plc vaccine to the United Kingdom until the drugmaker fulfills its delivery obligations to the bloc. The pound was weaker.
These are some important events to watch out for this week:
- Fed Powell President is the first to arrive on Monday at the BIS Innovation Summit, a virtual meeting of leading central bankers. He talks with Jens Weidmann of the Bundesbank about progress in the digital age. Christine Lagarde of the ECB, Andrew Bailey of the BOE and heads of Sweden, Canada, Mexico and Brazil followed.
- Powell and Treasury Secretary Janet Yellen are due to make their first joint appearance before the U.S. House Financial Services committee to testify about Fed and Treasury pandemic policies on Tuesday.
- EIA crude oil inventory report on Wednesday.
- Friday, February US personal income and spending data comes in the wake of $ 600 stimulus checks, but before the latest round of $ 1,400 payments started to hit Americans’ bank accounts.
These are some of the main movements in the financial markets:
Stocks
- S&P 500 futures fell 0.3% as of 7:15 am in Tokyo. Nasdaq 100 futures were down 0.4%.
- Nikkei 225 futures fell 0.6% earlier.
- Australia’s S & P / ASX 200 futures fell 0.2% earlier.
- Hang Seng index futures were up 0.4% earlier.
Coins
- The yen rose 0.1% to 108.83 per dollar.
- The Bloomberg Dollar Spot Index advanced 0.1%.
- The euro fell 0.1% to $ 1.1887.
- The Australian dollar fell 0.2% to 77.26 cents.
Titles
- Yield on 10-year Treasury bills rose a basis point to 1.72%, the highest in about 14 months.
- Yield on Australia’s 10-year bonds rose a basis point to 1.82%.
Commodities
- West Texas Intermediate crude fell 0.7% to $ 61.02 a barrel.
- Gold was at $ 1,739.92 an ounce.
(Corrects the extent of the Turkish lira decline in paragraph two.)