© Reuters. Passers-by wearing a protective face mask are reflected on the screen showing the Japanese yen exchange rate against the US dollar and the share prices against a broker, amid the coronavirus (COVID-19) disease in Tokyo.
By Wayne Cole
SYDNEY (Reuters) – Asian equities confirmed on Monday that some calm returned to the bond market after last week’s wild ride, while progress in the big US stimulus package supported optimism about the world economy.
China’s official PMI for manufacturing over the weekend missed forecasts, but investors are counting on better news from a series of US data available this week, including the payroll report in February.
The centerpiece of the news was also that the newly approved Johnson & Johnson (NYSE 🙂 COVID-19 vaccine had to start on Tuesday.
MSCI’s largest index of Asia-Pacific stocks outside Japan rose 0.1%, after falling 3.7% last Friday.
rose 2.0%, while NASDAQ futures jumped 0.8% and 0.7%, respectively.
Yields on U.S. 10-year notes declined from 1.40%, from a high of 1.61% last week, although it ended 11 basis points higher last week and has risen 50 basis points so far.
“The bond is still moving like a break for air on Friday, rather than making the catalyst for a move to calmer waters,” said Rodrigo Catril, a senior strategist at NAB.
“Market participants remain nervous about the prospect of higher inflation as economies seek to reopen, aided by vaccine deployments, high levels of savings coupled with solid fiscal and monetary support.”
Analysts at BofA have noted that the bond market is now one of the worst recorded, with the annual price yield of ten years US government bonds since August last year at 29%, with Australia at 19%, the UK at 16% and Canada at 10%.
The route was largely due to expectations of faster growth in the U.S., as House President Joe Biden passed $ 1.9 billion in coronavirus aid packages and sent them to the Senate.
BofA’s US economist Michelle Meyer has raised her forecast for economic growth to 6.5% for this year and 5% next, due to the likelihood of the larger stimulus package, better news on the virus front and encouraging data.
Virus cases have also decreased by 72% since a peak of January 12 and hospitalizations are lagging far behind, BofA added.
Higher U.S. yields combined with the general shift to safety helped the setback to 90,917 from a seven-week low of 89,677.
Early Monday, the euro held $ 1.2086, compared to its high of $ 1.2242 last week, while the dollar on the yen was 106.50 near a six-month high.
“Risky” currencies and those exposed to commodities jumped a bit after getting a pack of punches late last week, with the Australian and Canadian dollars higher and emerging markets from Brazil to Turkey looking more stable.
Non-yield gold continued to hit losses after hitting an eight-month low on Friday on its way to its worst month since November 2016. It was last at $ 1,737 per ounce, just above a trough of about $ 1,716.
Oil prices increased their profits ahead of an OPEC meeting this week where supply could be increased. reached 4.8% last week and WTI 3.8%, while both were about 20% higher than in February. [O/R]
Brent last rose 92 cents to $ 65.34, while rose 97 cents to $ 62.47 a barrel.