Asian Shares Weak Due to Rise In U.S. Treasury Yields
The Asian shares were shaky on Tuesday after two straight losses and also due to the 10-year Treasury yields of the U.S. rising after it reached its lowest since December 2017. The investors are still wary as the chances of the U.S. economy falling into recession is increasing.
In the market:
The Asia-Pacific’s broadest index, MSCI was at a high of 0.3% after losing in the previous session. Hong Kong’s Hang Seng index increased by 0.5%, and the CSI 300 of the Chinese blue-chip rose by 0.3%. The S&P 500 index had a fall of 0.8%, and the shares of Wall Street remained unchanged. The U.S. E-minis and the stock futures rose by 0.3%. Japan’s Nikkei increased by 1.8% after a drop, and the Australian shares remained unchanged.
The U.S. yields fell, and that made the dollar attractive. It remained flat and was at 110.04 for a ten after hitting a hit of 109.7 in the previous day. The Euro made a slight gain on the Ifo business climate index increased more than forecasts and was at $1.1316 after a 6-month decline. The pound erased small gains made after the lawmakers voted against the deal proposed by the British Prime Minister Theresa May.
The Treasury yields of the 10-year bonds fell after it showed an inverted yield curve which is seen as a signal of a recession in the U.S. It shed 5 basis points and ended at 2.43%. Investors are now worried by the fall in bond yields and also the inverted curve. The Federal Reserve last week announced that it would not raise the interest rates for this year and also said it is ending the balance sheet reduction due to signs of a slow economy. That lead to a fall of 18 basis points since the announcement. Michael Every a strategist at Robo Bank said
“The U.S. yield curve continues to invert. This is not a healthy sign, as bond-market watchers should know and equity market obsessives should rapidly learn. How much further will this run before we see markets starting to do the same?.”
Oil prices fell despite the U.S. tightening the crude supply, but concerns of slow global economy offset it. The WTI was at $59.21 for a barrel, and up by 0.7%, the Brent futures also rose by 0.2% and was at $67.33 for a barrel. Gold was at $1,3290.90 nearing the previous high of last month.