SYDNEY v MIAMI (Reuters) – Asian equities fell to a one-month low on Friday as a slump in global bond markets sent returns and scared investors amid fears that heavy losses could trigger the sell-off of others. active.
The scale of the sale prompted Australia’s central bank to launch a surprise bond-buying operation to try to bleed, helping yields come from early peaks.
10-year treasury yields fell to 1.494% from a one-year high of 1.614%, but rose another astonishing 40 basis points for the month in the biggest move of 2016.
“The transition to fixed income is becoming a more lethal phase for risky assets,” said Damien McColough, head of Westpac’s rate strategy.
“Rising yields have long been seen as a story of improving growth expectations, if anything covering risky assets, but the overnight move has included a sharp rise in real rates and a rise in expectations. Fed.
Markets were hedging the risk of a previous Federal Reserve rate hike, although officials this week promised that any move would be long in the future.
Currently, Fed funds futures prices are almost entirely up from 0.25% by January 2023, while Eurodollars have reduced it by June 2022.
Even the thought of a possible end to super-cheap money sent shivers down the global stock markets, which regularly hit record highs and extended valuations.
The broader MSCI index of Asia-Pacific equities outside Japan fell 2.4% to its one-month low, while the Japanese Nikkei fell 2.5%.
The Chinese blue faces joined the withdrawal with a decrease of 2.5%.
NASDAQ futures fell 0.5% after a sharp decline overnight, while S&P 500 futures fell 0.1%. EUROSTOXX 50 futures lost 1.2% and FTSE futures 1.1%.
URGENT DEFORMATION
Overnight, the Dow fell 1.75%, while the S&P 500 lost 2.45% and the Nasdaq 3.52%, the biggest decline in nearly four months for the tech-heavy index.
Dear technicians have all suffered, with Apple Inc., Tesla Inc., Amazon.com Inc., NVIDIA Corp. and Microsoft Corp. being the biggest attractions.
All of this has raised the importance of data on personal consumption in the US, which is to come later, which includes one of the inflation measures favored by the Fed.
Core inflation is expected to fall to 1.4% in January, which could help ease market anxiety, but any upward surprise is likely to accelerate the fall in bonds.
Rising treasury yields have also led to cuts in emerging markets, who feared that better returns in the United States could attract funding.
Favored currencies for leverage transactions, all suffered, including the Brazilian real, the Turkish lira and the South African turn.
Flows helped boost the broader US dollar, with the dollar index rising to 90,360. It also won the low-yielding yen, briefly hitting its highest in September at 106.42. The euro fell to $ 1.2152.
Yield growth has tarnished gold, which does not provide a fixed return, and pulled it up to $ 1,767 per ounce from the week high, around $ 1,815.
However, ANZ analysts were more aggressive about the outlook.
“We now expect US inflation to reach 2.5% this year,” they said in a statement. “Combined with the further depreciation of the US dollar, we see the fair value of gold at $ 2,000 / oz in the second half of the year.”
Oil prices remained near a 13-month high, with profits limited by a sharp drop in US crude oil production last week due to the Texas winter storm. [O/R]
US crude fell 44 cents to $ 63.08 a barrel, and Brent lost 33 cents to $ 66.55.