Market Wrap: 10 March 2023

Market Wrap: 10 March 2023

Asia Stocks Slide as Treasuries Rally; Yen Weakens: 

  • Investors look to Friday data on payrolls, unemployment rate
  • Kuroda’s last meeting as BOJ governor brings no change

Asian shares dropped Friday following a sharp decline on Wall Street amid concern that pockets of trouble in the US banking sector could portend broader dangers.

Treasuries extended their rally. The yen weakened while Japan’s 10-year government bond yield dropped comfortably below the top of the central bank’s allowable trading band after monetary policy was kept unchanged. 

An Asian equity gauge slid more than 1.5% and headed for the lowest close since early January. Finance stocks were among the heaviest decliners after banks came under fire in the US with the collapse of Silvergate Capital Corp. and troubles at Silicon Valley-based lender SVB Financial Group.

Asian shares related to cryptocurrencies slumped and MSCI China Index also fell, erasing all of its gains for this year. 

The Bank of Japan maintained its policy balance rate at -0.1% and kept its 10-year yield target at about 0% at Governor Haruhiko Kuroda’s last meeting, as was expected by most economists. That’s removed one wildcard for traders Friday but doesn’t change the long-term challenge the BOJ faces with bond-market dysfunction and upward pressure on interest rates.

“We expect continued policy normalization and it is likely to come under the new Governor Ueda. The exact timing of the policy change will be difficult to predict and could be as early as the second quarter,” said Jennifer Kwan, senior investment specialist for global fixed income, currency and commodities at JPMorgan Asset Management. “We are staying underweight in Japanese bonds, in view of the potential higher yields in JGBs later this year.” 

Treasury yields extended their declines after the rout in stocks spurred demand for haven assets. Yield on the two-year continued its slide to more than 10 basis points at one point on Friday. Australian and New Zealand government bonds rallied as well.    

US stocks had gained early in the session Thursday after data showed weekly jobless claims had risen to 211,000 during the week ending March 4, ahead of expectations for 195,000 and marking the first time claims surpassed 200,000 since early January. 



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