(Bloomberg) — Asian stocks fluctuated with U.S. equity futures Monday as benchmark Treasury yields traded around a one-year high and China data painted a patchy economic picture.
Ten-year Treasury yields stayed above 1.6% as vaccinations and the $1.9 trillion U.S. stimulus keep the spotlight on inflation risk amid an economic recovery. Australian and New Zealand 10-year rates rose Monday. The dollar edged up versus major peers.
Chinese shares initially pared losses on data showing a surge in economic activity before slipping again. The figures mask an uneven recovery, and money market rates rose after the central bank refrained from providing more liquidity into the financial system. S&P 500 and Nasdaq 100 futures pared gains. The S&P 500 closed higher Friday amid rallies in financial and industrial shares. The Nasdaq 100 gauge slid and the Dow Jones Industrial Average added to its all-time high.
In Hong Kong, Xiaomi Corp. surged after a temporary halt to a U.S. ban, while Tencent Holdings Ltd. edged back on expectations that it faces increased regulatory supervision. Elsewhere, oil climbed and Bitcoin traded above $60,000 after surpassing $61,000 on the weekend in a meteoric rise.
Markets are preoccupied with rising long-term borrowing costs and their implications for reflation trades and the rotation in the stock market from growth to value shares. The Federal Reserve decision later in the week is one of a slew due from central banks globally.
“Despite elevated valuations across both equities and credit, it’s very hard not to be positive on risk assets in this environment,” Patrik Schowitz, global multi-asset strategist at JPMorgan Asset Management, said in a note. “Yet the change of pace in markets last week maybe also suggests a lot is priced already.”
Treasury Secretary Janet Yellen said U.S. inflation risks remain subdued despite the Biden administration stimulus. A strong recovery from the Covid-19 recession is likely to prompt Fed Chair Jerome Powell and his colleagues to lift interest rates in 2023, but that isn’t going to show up in their forecasts this week, a Bloomberg survey of economists showed.
Fed to Hike Rates in 2023 But Dots Won’t Show It, Economists Say
China’s economic activity surged in the first two months of the year, however, the underlying momentum shows a rebound that’s on a two-speed track, with strong industrial output and export demand and a lagging consumer recovery.
These are some key events this week:
China industrial production and retail sales are due Monday.Fed Chair Jerome Powell will likely reaffirm his no-tightening policy stance at the Fed policy meeting Wednesday.Bank of England rate decision Thursday. BOE is expected to leave monetary policy unchanged.Bank of Japan monetary policy decision and Governor Haruhiko Kuroda briefing Friday.
These are the main moves in markets:
Stocks
S&P 500 futures rose 0.1% as of 12:30 p.m. in Tokyo. Nasdaq 100 futures were little changed.Japan’s Topix index rose 0.7%.Australia’s S&P/ASX 200 Index was flat.South Korea’s Kospi index fell 0.2%.Hong Kong’s Hang Seng Index added 0.3%%.China’s CSI 300 Index fell 1.7%.
Currencies
The yen was at 109.14 per dollar, down 0.1%.The offshore yuan fell to 0.2% to 6.5084 per dollar.The Bloomberg Dollar Spot Index rose 0.1%.The euro traded at $1.1948.
Bonds
The yield on 10-year Treasuries edged up to 1.63%.Australia’s 10-year bond yield jumped eight basis points to 1.79%.
Commodities
West Texas Intermediate crude rose 0.9% to $66.22 a barrel.Gold was at $1,725.94 an ounce.
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