Asian Markets in Turmoil
Asian markets are set to drop after a slump in U.S. Treasuries. The 10-year Treasury yield rose to its highest level since 2014, spurring a sell-off in Asian stocks. The MSCI Asia Pacific Index fell 0.7%, while Japan’s Topix index dropped 0.9%.
U.S. Treasury Yields Surge
The 10-year Treasury yield rose to 1.76%, its highest level since 2014. The yield has been steadily rising since the start of the year, as investors anticipate higher inflation and economic growth. The yield on the 30-year Treasury also rose to 2.51%, its highest level since 2018.
The rise in yields has been driven by a combination of factors, including the Federal Reserve’s decision to keep interest rates low, the passage of President Joe Biden’s $1.9 trillion stimulus package, and the expectation of higher inflation.
Asian Markets React to U.S. Treasury Yields
The rise in U.S. Treasury yields has had a ripple effect on Asian markets. The MSCI Asia Pacific Index fell 0.7%, while Japan’s Topix index dropped 0.9%.
In Hong Kong, the Hang Seng Index fell 1.2%, while the Shanghai Composite Index dropped 0.8%. South Korea’s Kospi index fell 0.7%, while Australia’s S&P/ASX 200 index dropped 0.6%.
Impact on Asian Currencies
The rise in U.S. Treasury yields has also had an impact on Asian currencies. The Japanese yen weakened against the U.S. dollar, while the South Korean won and the Australian dollar also weakened.
The Chinese yuan was relatively stable, as the People’s Bank of China has been intervening in the currency market to keep the yuan from appreciating too quickly.
Impact on Commodities
The rise in U.S. Treasury yields has also had an impact on commodities. Oil prices fell, as the rise in yields made it more expensive for investors to hold oil. Gold prices also fell, as the rise in yields made it less attractive for investors to hold gold.
Outlook for Asian Markets
The outlook for Asian markets is uncertain. The rise in U.S. Treasury yields has had a negative impact on Asian markets, but the impact could be short-lived.
The Federal Reserve has indicated that it will keep interest rates low for the foreseeable future, which could help to support Asian markets. In addition, the Chinese economy is expected to continue to grow, which could provide a boost to Asian markets.
Overall, the outlook for Asian markets is uncertain. The rise in U.S. Treasury yields has had a negative impact on Asian markets, but the impact could be short-lived. Investors should continue to monitor the situation closely.