U.S. Treasury yields eased on Thursday as a week-long surge that followed Donald Trump’s shock election win subsided further, dragging the dollar off a 13-1/2 year peak set overnight and nudging Asian stocks a touch higher.
Japanese government bond yields also fell back from multi-month highs after the Bank of Japan conducted a special fixed-rate bond buying operation for the first time, firing a warning shot against excessive yield moves.
The dollar index, which measures the greenback’s strength against a basket of major currencies, stood at 100.280 .DXY after climbing to 100.570 overnight, its highest since April 2003.
The dollar has soared since Trump was elected president last week, as investors eyed the prospect of U.S. interest rates rising faster than previously expected due to his plans for an expansionary fiscal policy that would stoke inflation.
But the rout in U.S. bond prices began to slow, with the benchmark 10-year note yield US10YT=RR pulling back to 2.197 percent in Asian trade after touching an 11-month high above 2.3 percent earlier in the week.
“The Trump-related move in fixed income has been very strong while information flow about the path of economic policy has not been. It’s perhaps not surprising then that the rates market took a breather,” wrote Sharon Zollner, senior economist at ANZ.
“The price action in fixed income suggests that the market has moved sufficiently for the time being, which raises the possibility that the dollar’s rise may be due for a period of consolidation.”
Global debt markets, at the mercy of surging U.S. yields until earlier in the week, began to regain some calm.
German and British benchmark yields have receded after peaking at ten-month and five-month highs, respectively, earlier in the week.
Japan’s 10-year yield JP10YTN=JBTC was steady at 0.015 percent after rising to a nine-month high of 0.035 percent on Wednesday. Yields were knocked back after the BOJ offered to buy an unlimited amount of JGBs of certain maturities in a special operation.
BOJ Governor Haruhiko Kuroda said on Thursday he does not have to accept gains in JGB yields simply because U.S. Treasury yields are rising.
The Japanese central bank announced in September that it will aim to keep the benchmark yield pinned around zero percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS nudged up 0.1 percent. It was still down about 1 percent on the week as the prospect of higher U.S. interest rates pulled money away from emerging markets.
Japan’s Nikkei .N225 dipped 0.1 percent after touching a nine-month high on Wednesday on the yen’s sharp fall.
“In the Japanese market, as stocks have risen too fast, profit-taking is not surprising,” said Takuya Takahashi, a strategist at Daiwa Securities in Tokyo.
In currencies, the dollar was flat at 109.060 yen JPY= after touching a five-month high of 109.760 overnight.
The euro EUR= added 0.1 percent from Wednesday to stand at $1.0702 after setting an 11-month low of $1.0666 overnight.
Crude oil prices eased as a bigger-than-expected U.S. crude inventory build outweighed hopes for a producers’ freeze on output following Russia’s comments about a possible meeting with Saudi Arabia.
Brent crude was down 0.2 percent at $46.55 a barrel LCOc1.
Gold nudged up slightly as the dollar consolidated. Spot gold XAU= inched up 0.1 percent to $1,226.10 an ounce, moving further away from the five-month low of $1,211.08 set on Monday.
Gold had still lost roughly $100 an ounce from last Wednesday’s post-U.S. election high on the back of the sharp rise in bond yields and burgeoning appetite for risk.
(Additional reporting by Ayai Tomisawa in Tokyo; Editing by Simon Cameron-Moore)
Asian markets mixed as US rally fades, dollar retreats
KUALA LUMPUR, Malaysia (AP) — Asian stock markets were mixed, trading in a narrow range, on Thursday as a seven-day rally on Wall Street petered out overnight. The U.S. dollar retreated slightly after hitting a 13-year high and oil prices slipped.
KEEPING SCORE: Japan’s Nikkei was flat at 17,862.63 and Hong Kong’s Hang Seng index eased 0.1 percent to 22,298.58. China’s Shanghai Composite Index lost 0.2 percent to 3,199.27 and South Korea’s Kospi shed 0.1 percent to 1,982.31. Australia’s S&P/ASX rose 0.2 percent to 5,338.50, while benchmarks in Taiwan, Singapore and Southeast Asia gained.
ANALYST’S TAKE: Alex Furber, sales trader at CMC Markets in Singapore, said Asian markets are still struggling for direction amid uncertainties over policies from President-elect Donald Trump.
“It is very difficult to differentiate what is campaign and what is rhetoric. There is a lot of uncertainty over what policies will actually be put in place in the first 100 days of his presidency,” Furber said. “That is why the rally in the U.S. has started to fade last night.”
OIL: Benchmark U.S. crude extended losses, easing 11 cents to $45.46 a barrel in electronic trading on the New York Mercantile Exchange. The contract closed down 24 cents to $45.57 a barrel on Wednesday. Brent crude, which is used to price international oils, fell nine cents to $46.54 a barrel in London.
WALL STREET: U.S. stocks were mixed Wednesday as banks returned some of the huge gains made since the presidential election last week but technology and consumer stocks climbed. The Dow Jones industrial average dipped 0.3 percent to 18,868.14. The Standard & Poor’s 500 index lost 0.2 percent to 2,176.94 but the Nasdaq composite added 0.4 percent to 5,294.58.
CURRENCIES: The dollar rose to 109.24 yen from 109.15 yen late Wednesday. The euro rose to $1.0695 from $1.0681.
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