Sunday, January 16

Mixed Stocks, Bonds Pull Back Amid Inflation Concerns: Markets Wrap Up


Asian stocks were mixed on Thursday after the hottest US inflation in three decades hurt Wall Street stocks and triggered a jump in Treasury yields amid concerns that monetary policy will tighten further. quickly.

Stocks rose in Japan and China, but fell in Hong Kong. US futures held steady as traders took in submissions that showed Tesla Inc. CEO Elon Musk dumped $ 5 billion in stock from the electric car maker. The S&P 500 fell and the Nasdaq 100 underperformed as investors questioned the richer valuations of technology stocks.

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Concerns about price pressures raised expectations of interest rate hikes. Treasury yields spiked along the curve, and the 10-year yield rose more than 10 basis points. A poorly received 30-year auction added to the heartache. Sovereign bonds fell in Australia and New Zealand. Cash Treasuries are not traded on Thursday due to a US holiday.

The dollar hovered around a one-year high. Gold maintained a gain and Bitcoin was hovering around $ 64,650 after falling from a new all-time high on Wednesday. Oil stabilized after a drop caused in part by a surprise surge in US stocks.

The argument that price pressures are temporary due to pandemic-related distortions is under pressure. Traders are contemplating the Federal Reserve raising rates as soon as it completes phasing out bond purchases by the middle of next year. A more aggressive outlook is a risk to global stocks, which remain near record levels.

“This is the perfect time to gravitate toward defensive plays, make a profit and be in the sectors that are strategically positioned toward this volatile market that presents many challenges,” Katerina Simonetti, senior vice president of Morgan Stanley Private Wealth Management, said on Bloomberg Television.

Inflation expectations for the US bond market rose. The so-called five-year break-even rate advanced to a record higher than 3%. Treasury Secretary Janet Yellen reiterated her view Tuesday that high inflation will not persist beyond next year, saying the Fed will not allow 1970s-style price increases to recur.

Meanwhile, China’s major securities newspapers reported that bank loans to property developers increased dramatically in October and the momentum is expected to extend into November. That adds to signs that credit conditions may be improving for the ailing real estate industry. Real estate stocks advanced.

China Evergrande Group appears keen to avoid default after paying overdue interest on three US dollar bonds, while Kaisa Group Holdings Ltd. faces interest payments on dollar bonds this week.

What to watch this week:

  • The Central Decision-Making Committee of the Communist Party of China meets until Thursday.
  • The Marked US Bond is closed in observance of Veterans Day Thursday.
  • China celebrates its annual Singles Day, the world’s largest shopping festival, when e-commerce giants like Alibaba and JD.com Inc. lure shoppers with bargains on Thursday.

Stocks

  • S&P 500 futures were flat at 2pm in Tokyo. The S&P 500 fell 0.8%
  • Nasdaq 100 futures added 0.1%. The Nasdaq 100 fell 1.4%
  • Japan’s Topix index rose 0.3%
  • Australia’s S & P / ASX 200 Index fell 0.6%
  • South Korea’s Kospi Index fell 0.6%
  • Hong Kong’s Hang Seng Index fell 0.1%
  • China’s Shanghai Composite Index added 0.7%
  • Euro Stoxx 50 futures fell 0.4%

Currencies

  • The Japanese yen was at 113.97 to the dollar, down 0.1%.
  • The offshore yuan was at 6.4053 to the dollar.
  • Bloomberg’s dollar spot index rose 0.1%
  • The euro was at $ 1,1479

Captivity

  • The 10-year Treasury yield rose 11 basis points to 1.55% on Wednesday.
  • The yield on Australia’s 10-year bonds rose eight basis points to 1.81%.

Raw Materials

  • West Texas Intermediate crude was at $ 81.57 a barrel, up 0.3%
  • Gold was at $ 1,849.98 an ounce

© 2021 Bloomberg


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