TOKYO (Reuters) – A resurgence of concerns about rising U.S. bond yields hit global equities on Thursday as investors waited to see if Federal Reserve Chairman Jerome Powell would address concerns about risk. of a rapid increase in the costs of long-term loans.
The specter of higher US bond yields also undermined safe-haven, low-yielding assets like the yen, Swiss franc and gold.
Benchmark 10-year US Treasuries rose to 1.477% as investors bet that US inflation could pick up as the economic recovery picks up steam, fueled by government stimulus and greater progress in vaccination programs.
“It is not clear how the Fed wants to deal with bond yields,” said Hirokazu Kabeya, chief global strategist at Daiwa Securities.
“The pace of yield increases has been much faster than most people expected and there is speculation that the authorities may be starting to think about tightening their policy.”
Shares of the MSCI, excluding Japan, Asia-Pacific, lost 1.7% in early trading, while Japan’s Nikkei fell 1.9%.
E-mini S&P futures fell 0.4%, while Nasdaq futures, the unequivocal leader of the post-pandemic rally, fell 0.6% to a two-month low.
Tech stocks are vulnerable because their high valuation has been supported by expectations of a prolonged period of low interest rates.
Powell is due to speak at 12:05 pm EST (1705 GMT). Many Fed officials have downplayed rising Treasury yields in recent days, though Fed Governor Lael Brainard on Tuesday acknowledged concerns about the possibility that a rapid rise in yields could slow down economic activity.
The market will have to deal with a huge spike in debt sales after rounds of stimulus to cope with a recession brought on by the pandemic.
The problem is not limited to the United States, with the yield on the British 10-year Gilts returning to 0.779%, close to its 11-month high of 0.836% reached last week, after the government revealed much higher indebtedness. .
Currency investors continued to earn dollars while betting on an American economy that would outshine 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 had a one-way trajectory since early 2021,” said Joseph Capurso, head of international economics at the Commonwealth Bank of Australia.
“The prospects for the improvement of the world economy are positive for both the US dollar / yen and the Australian dollar / yen.”
Other safe-haven currencies were soft, with the Swiss franc flirting with a four-month low against the dollar and a 20-month low against the euro.
Gold touched a nine-month low of $ 1,702.8 per ounce on Wednesday and last stood at $ 1,711.5.
Other major currencies were little moved, with the euro flat at $ 1.2054.
Investors’ focus on a US economic rebound was unaffected by data released overnight that showed the US job market struggling 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 supported alongside a drop in inventories of oil. fuel from USA [O/R]
US crude rose 0.3% to $ 61.44 a barrel.
Additional information on Koh Gui Qing in New York; Editing by Sam Holmes and Richard Pullin