Asia Stocks Slip As Treasury Yields Surge
Asia stocks slipped at the open Tuesday, Sept. 28, 2021, after a jump in Treasury yields weighed on U.S. equities and an oil rally raised inflationary concerns, Andreea Papuc reported for Bloomberg.
Photo Insert: The Tokyo Stock Exchange
Shares had modest declines in Japan, Australia, and South Korea. US futures dipped. Investors rotated out of growth stocks as the benchmark 10-year US yield briefly topped 1.5% -- a level not seen since June.
The tech-heavy Nasdaq 100 underperformed. The S&P 500 dipped, though economically sensitive companies like energy, financial and smaller firms advanced.
The US two-year yield rose to its highest since March 2020 as traders increasingly priced in the prospect of the Federal Reserve tapering its bond purchases soon. The dollar was little changed. Oil held onto gains on fears of a global energy crunch.
Brent rose to the highest in nearly three years, while WTI crude climbed above $75 a barrel. Goldman Sachs Group Inc. said Brent could hit $90 by year-end as the market is in a bigger deficit than many realize. The ten-year rate briefly touches 1.5%
The spike in yields added to concerns about lofty equity valuations, particularly in the tech industry, which has powered the bull-market rally. Traders are bracing for the Federal Reserve to start tapering asset purchases as early as November following a more hawkish tilt.
Investors have had to contend with a series of risks in recent weeks, including cracks in the Chinese property sector and worries about the impact of skyrocketing energy costs on inflation.