SYDNEY (Reuters)-Asian stock markets took a breather on Monday, while U.S. Treasury yields are at a 10-month high. This is because this week the United States will announce the “trillion dollars” in the new fiscal stimulus plan, which stimulates global currency Inflate trade.
With increasing pressure to impeach Donald Trump, investors remain cautious about American politics, although signs of actual trials may take some time.
The MSCI Asia-Pacific region̵
South Korean stocks were flat after rising in early trading, and Chinese blue-chip stocks rose 0.7%.
Richard Yetsenga, chief economist at ANZ Bank, said: “Asia has survived the second global crisis in this millennium with its credibility.”
“Compared with advanced economies, Asia’s growth is stronger, and its population and debt levels are largely better.”
He pointed out that the shift in fortunes between the semiconductor and energy industries highlights the success of Asia, as this region produces about 45% of the world’s semiconductors.
He said: “The market value of the global semiconductor industry has surpassed energy for the first time.” “At the time of the last crisis 12 years ago, the energy sector was more than five times the size of the latter.”
Standard & Poor’s 500 Index futures fell 0.6% from last week’s all-time high and rose 1.8% last week. EUROSTOXX 50 futures fell 0.1%, while FTSE futures were flat.
Last Friday’s weak employment report only triggered speculation about more fiscal stimulus plans in the United States, because Democrats have taken control of the government and long-term Treasury yields hit their highest level since March.
President-elect Biden was due to announce plans this week in the new “trillion” relief bill, most of which will be paid through increased borrowing.
At the same time, the Federal Reserve (Fed) sounds content to push fiscal policy responsibility to a climax. Vice Chairman Richard Clarida said that the $120 billion in debt purchased by the Fed each month will not be soon change.
As the Fed is unwilling to buy more long-term bonds, the 10-year US Treasury bond yield jumped nearly 20 basis points last week to 1.12%, the biggest weekly increase since June.
Treasury bond futures fell another 3 basis points in early trading on Monday.
Bank of America’s Mark Cabana warned that stimulus measures could further depress the dollar and cause the Fed to begin gradually reducing interest rates later this year.
He said in a report to his clients: “The Fed’s early interest rate cut poses an upside risk to our year-end 1.5% 10-year US Treasury bond target and supports our long-term expectation of a 3% increase in the neutral interest rate.
Poor salary reports will increase interest in U.S. inflation, retail sales and consumer confidence data.
Since JP Morgan, Citigroup and Wells Fargo are among the first companies to release fourth-quarter results on January 15, earnings will also be the focus.
The rise in yields in turn provided some support for the U.S. dollar, which fell below the U.S. dollar. The U.S. dollar rose to 90.439 from last week’s low of 89.206 against a basket of currencies.
The euro fell back to 1.2170 from the recent high of 1.2349 against the US dollar, breaking the support at 1.2190. The dollar against the yen also rose to 104.18 from the low of 102.57 hit last week.
The sudden rise in bond yields destroyed non-interest-bearing gold, which fell 1.1% from its recent high of $1,959 to $1,828 per ounce. [GOL/]
Oil prices fell into profit-taking after reaching their highest point in nearly a year on Friday, rising 8% a week after Saudi Arabia promised to cut production. [O/R]
Brent crude oil futures fell 48 cents to $55.51, while US crude oil futures fell 28 cents to $51.96 per barrel.