SYDNEY (Reuters) – Asian equities took a breather on Monday as Treasury yields peaked at ten months as ‘trillions’ were introduced in the new US fiscal stimulus plans this week, marking a global trade in reflection cause.
Investors have been watching US politics closely as pressure has increased to accuse President Donald Trump, although signs could be a real trial, it could be a while.
MSCI’s broadest Asia-Pacific equities index outside Japan fell 0.2%, rising 5% last week to a record high. The Japanese Nikkei was on vacation after closing on Friday at a 30-year high.
South Korea flattened after an early jump, and Chinese blue chips strengthened 0.7%.
“Asia went through the second global crisis this millennium with its credentials,” said Richard Yetsenga, chief economist at ANZ.
“Asia’s growth is stronger, with mostly demographics and debt levels, than advanced economies.”
He noted that the prosperity between the semiconductor and energy sectors highlights the success of Asia, as the region produces 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.”
The futures contract for the S&P 500 has decreased by 0.6% from all times, after reaching 1.8% last week. EUROSTOXX 50 futures contracted 0.1% and FTSE futures contracts were flat.
Treasury long-term returns have been at their highest since March, after Friday’s weak jobs only sparked speculation about more U.S. fiscal stimulus now that Democrats have the government.
Elected President Joe Biden will this week unveil plans for ‘trillions’ in new bills, many of which will be paid for by increased loans.
At the same time, the Federal Reserve sounds content to pass the fiscal policy, with Vice President Richard Clarida saying there will soon be no change to the $ 120 billion debt that the Fed buys every month.
As the Fed was reluctant to buy bonds over a longer period, ten-year treasury yields rose nearly 20 basis points last week to 1.12%, the largest weekly rise since June.
Treasury futures lost three more ticks early Monday.
Mark Cabana at BofA warned that stimulus could push the dollar further and that the Fed could decline later.
“An early decline in the Fed creates upside risks to our ten-year treasury target of 1.5% at year-end and supports our long-term expectations for neutral rates moving to 3%,” he said in a note. customers said.
The weak payroll report will increase interest in US data on inflation, retail sales and consumer sentiment.
Earnings will also be in focus as JP Morgan, Citigroup and Wells Fargo are among the first companies to announce fourth-quarter results on January 15th.
The rise in yields, in turn, offers some support to the depleted dollar, which rose to 90,439 against a basket of currencies from last week’s low of 89,206.
The euro retreated to $ 1.2170 from a recent high of $ 1.2349, breaking support around $ 1.2190. The dollar also strengthened to 104.18 yen from a 102.57-hit trough last week.
The sudden rise in bond yields undermined gold, which pays no interest, and the metal fell 1.1% to $ 1,828 per ounce from its recent high of $ 1,959. [GOL/]
Oil prices became profitable after reaching their highest level in almost a year on Friday, with an 8% rise in the week after Saudi Arabia promised to reduce production. [O/R]
Brent crude futures fell 48 cents to $ 55.51, while U.S. crude futures lost 28 cents to $ 51.96 a barrel.