Asia stocks hold near highs, yields up on U.S. stimulus plans

Darnell Taylor
January 13, 2021

MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.2%, having surged 5% last week to record highs.

Worldwide coronavirus cases surpassed 90 million on Monday, according to a Reuters tally.

Futures for the S&P 500 slipped 0.6% from all-time peaks, after gaining 1.8% last week.

The pan-European STOXX 600 index fell 0.3%.

The 10-year USA yield touched its highest going back to March as prices were pressured ahead of a $38 billion offering later from the Treasury.

Expectations of a multitrillion-dollar stimulus plan and the belief the Federal Reserve will not act to counter rising interest rates, along with new Treasury supply are helping yields rise, said Gennadiy Goldberg, an interest rate strategist at TD Securities in NY.

"An early collapse of the Fed creates upside risks to our 10-year cash target of 1.5% at year-end and supports our longer-term expectations for neutral rates towards 3%.", he said in a note to customers.

The U.S. 10-year Treasury yield rallied to a almost 10-month high Tuesday as investors anxious that stimulus measures to combat the economic slowdown caused by COVID-19 could unleash a wave of inflation down the road.

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"Short-term gold is still vulnerable to US dollar sentiment and yields, but gold is finding some support around the $1,830 level and it may use that as a base to consolidate and push higher from".

Brent was at $56.46, up 1.44pc on the day, while US crude recently rose 1.36pc to $52.96 per barrel.

Morgan Stanley said it had moved to neutral from bullish on emerging market currencies as its forecasts had been hit and factors that kept the USA dollar on the back foot may not be sustained. The dollar also gained 104.18 yen after a low of 102.57 reached last week.

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research said that hopes of stimulus in the US have pulled gold prices lower along with the US Treasury yields and bull run in equity markets.

"The renewed concerns about demand due to very high numbers of new (COVID-19) cases and further mobility restrictions, plus the stronger US dollar, are generating selling pressure", Commerzbank analyst Eugen Weinberg said.

Brent crude futures dipped 65 cents to $55.34, while US crude futures lost 41 cents to $51.83 a barrel.

Bitcoin last fell 17.49% to $31,498.43.

South Korea reversed an early jump to fall 0.1%, and Chinese blue chips fell 1%. At its session low, the cryptocurrency fell 21% on Monday.

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