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Home / Business / Global markets fall after bond yields soar

Global markets fall after bond yields soar



On Friday, international stocks fell, tracking the decline in US indexes as the sell-off of bonds helped reduce investor interest in highly valued stocks.

However, the rise in US Treasury bond prices recovered part of the decline in the previous trading day, and futures hinted that the New York stock market may stabilize or rise slightly in Friday trading.

Investors said that although Chairman Jerome Powell (Jerome Powell) assured that the central bank will not raise interest rates in the short term, the market has been reassessing the prospect of the Fed’s rate hike.

“What has happened in recent weeks is that the market has to reprice expectations of the Fed’s rate hike,” said Dwyfor Evans, head of macro strategy for the Asia-Pacific region at State Street Global Markets in Hong Kong.

He said that the rebound in bond yields will have a knock-on effect on areas such as corporate loans and mortgage interest rates. “This is why stocks will be under pressure here, because rising yields will have a certain impact on real estate. [economy] And revenue may have to slow down,”

; Mr. Evans said.

By early Friday morning on Friday, the major benchmark indexes of Hong Kong and Japan had both fallen by more than 2%, and China’s CSI 300 index had also fallen by 2%, including large stocks listed in Shanghai or Shenzhen. South Korea’s Kospi Composite fell more than 3%.

Like the United States, in Asia, the biggest decline comes from the rapidly growing share of technology.SoftBank Group,

Samsung Electronics and Taiwan Semiconductor Manufacturing the company

Both fell more than 3%, while Chinese food delivery giant Meituan fell 5.9%.

Higher bond yields indicate that the US economy is returning to normal, which bodes well for corporate earnings. But compared to stocks, they also increase the relative attractiveness of bonds and may cause investors to reassess how much they should pay for expected future profits now-this is especially a problem for fast-growing technology stocks.

Ken Wong, portfolio manager of Eastspring Investments, said: “Given that the market has rebounded in the past 10 months, you will see a lot of profit-taking.” Mr. Huang said that rising borrowing costs have caused some market participants to withdraw the use of leveraged purchases. The position, and the expensive valuation has also intensified people’s caution.

According to data from Refinitiv, as of Thursday, the trading price of the MSCI AC World index was 20 times the expected return, a 37% premium to the average level over the past ten years.

On Thursday, as the 10-year U.S. Treasury yield rose to a one-year high of more than 1.5%, the S&P 500 fell 2.4% and the Nasdaq fell 3.5%. Bond yield is inversely proportional to price.

But futures hinted that Friday’s sell-off in the US stock market may not expand further, with the Standard & Poor’s 500 index down 0.1% and the Nasdaq 100 futures down 0.5%.

According to data from Tradeweb, in Asian transactions, the yield on the 10-year U.S. Treasury bond fell by 0.017 percentage points to 1.498%.

Following the sell-off in the US on Thursday, some regional bond markets have also surged, with Australia’s benchmark yield rising to 1.87%, the highest since 2019.

In Japan, the 10-year Treasury bond yield also hit a multi-year high of 0.16%. Since 2016, the Bank of Japan has kept the 10-year interest rate near zero under its yield curve control policy, although in recent years it has allowed interest rates to rise or fall by as much as 0.2 percentage points.

Write to Xie Yu at Yu.Xie@wsj.com

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