ASIA STOCKS, YIELDS DECLINE ON FED HAWKISH PIVOT
Stocks slid Monday, June 21, 2021, and Treasury yields fell as traders soured on the reflation trade in the wake of a hawkish pivot by the Federal Reserve. The dollar remained at about a two-month high, Andreea Papuc reported for Bloomberg News.
Japan led the Asian equity retreat, with the Nikkei 225 dropping as much as 3.4%, while US futures edged down after an S&P 500 slump. Hong Kong fell and Chinese shares were modestly lower.
Treasury yields slipped, taking the 30-year rate below 2% for the first time since February, as the prospect of less accommodative US monetary policy buffeted markets.
The flattening of the Treasury yield curve is another illustration of the retreat in reflation bets. Short-maturity yields surged after Fed official James Bullard said inflation risks may warrant higher interest rates next year, an earlier liftoff than penciled in by many of his colleagues.
In Hong Kong, China Evergrande Group fell to the lowest in four years, underscoring renewed concerns about the financial health of the world’s most indebted developer.
S&P 500 futures slipped 0.3% as of 10:49 a.m. in Tokyo. The gauge fell 1.3% Friday. Nasdaq 100 futures were 0.1% lower. The index fell 0.8%. Japan’s Topix index shed 2.5%. Australia’s S&P/ASX 200 Index dropped 1.8%. South Korea’s Kospi index fell 0.9%.
Hong Kong’s Hang Seng Index declined 1.2%. China’s Shanghai Composite Index retreated 0.2%. The yen was little changed at 110.17 per dollar. The offshore yuan traded at 6.4583 per dollar, up 0.1%.
The Bloomberg Dollar Spot Index was steady after rising 0.4% Friday. The euro was at $1.1870. The yield on 10-year Treasuries dipped two basis points to 1.42%. Australia’s 10-year yield fell five basis points to 1.55%. West Texas Intermediate crude rose 1% to $72.33 a barrel. Gold rose 0.5% to $1,772.19 an ounce, Sophie Caronello reported for Bloomberg News.