- Treasury 10-year rate jumps, bonds in Asia follow suit
- Investors contend with another round of policy tightening
Asian stocks headed for a sixth weekly decline following another day of losses for US shares and surging Treasury yields that underscore expectations for tighter monetary policy and a slowing global economy.
Equities fell Friday in Hong Kong, Australia and South Korea after the S&P 500 closed at the lowest level since June. US futures fluctuated.
The 10-year Treasury yield soared 18 basis points to pierce 3.7% on Thursday, its highest in a decade as investors weighed the risk of recession. Yields in Asia pushed higher, led by a jump of more than 20 basis points in Australia as trading resumed there after a holiday.
A dollar gauge held near a record high after a day of dramatic moves in currency markets that saw Japan intervene to prop up the ailing yen for the first time since 1998.
Japan’s intervention hasn’t addressed the underlying cause of yen weakness — the yawning gap between Japan’s ultra-loose monetary policy and rising rates in other countries — leaving the currency vulnerable.
Rate hikes overnight in the UK, Switzerland and Norway, along with increases Thursday in Asia in the Philippines, Indonesia and Taiwan, look set to damp market sentiment in the region.
The Federal Reserve has given its clearest signal yet that it’s willing to tolerate a recession as the necessary trade-off for regaining control of inflation, with officials forecasting a further 1.25 percentage points of tightening before year-end.
Elsewhere in markets, gold fluctuated and Bitcoin pushed higher, extending gains to a second day, while remaining below $20,000. Oil clung to a slight gain as it headed toward a fourth weekly loss.