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

By Wayne Cole SYDNEY (Reuters) - Asian shares took a breather on Monday while Treasury yields were at 10-month highs as 'trillions' in new U.S. fiscal stimulus plans were set to be unveiled this week, stoking a global reflation trade

Reuters January 11, 2021 07:05:17 IST
Asia stocks hold near highs, yields up on U.S. stimulus plans

Asia stocks hold near highs yields up on US stimulus plans

By Wayne Cole

SYDNEY (Reuters) - Asian shares took a breather on Monday while Treasury yields were at 10-month highs as "trillions" in new U.S. fiscal stimulus plans were set to be unveiled this week, stoking a global reflation trade.

Investors were keeping a wary eye on U.S. politics as pressure grew to impeach President Donald Trump, though signs were an actual trial could be some time away.

MSCI's broadest index of Asia-Pacific shares outside Japan was flat, having surged 5% last week to record highs. Japan's Nikkei was closed for a holiday after closing at a 30-year high on Friday.

"Asia has come through the second global crisis this millennium with its credentials," said ANZ chief economist Richard Yetsenga.

"Asia's growth is stronger, with for the most part better demographics and debt levels, than advanced economies."

He noted a turnaround in fortunes between the semiconductor and energy sectors highlighted Asia's success, given the region produced around 45% of the world's semiconductors.

"For the first time the global semiconductor sector's market capitalisation has surpassed energy," he said. "At the time of the last crisis, 12 years ago, the energy sector was more than five times larger."

Futures for the S&P 500 were steady near all-time peaks, after gaining 1.8% last week.

Longer-term Treasury yields were at their highest since March after Friday's weak jobs report only fanned speculation of more U.S. fiscal stimulus now that the Democrats have control of the government.

President-elect Joe Biden is due to announce plans for "trillions" in new relief bills this week, much of which will be paid for by increased borrowing.

At the same time, the Federal Reserve is sounding content to put the onus on fiscal policy with Vice Chair Richard Clarida saying there would be no change soon to the $120 billion of debt the Fed is buying each month.

With the Fed reluctant to purchase more longer-dated bonds, 10-year Treasury yields jumped almost 20 basis points last week to 1.12%, the biggest weekly rise since June.

Treasury futures lost another 3 ticks early Monday.

Mark Cabana at BofA warned stimulus could further pressure the dollar and cause Fed tapering to begin later this year.

"An early Fed taper creates upside risks to our year-end 1.5% 10-year Treasury target and supports our longer-term expectations for neutral rates moving towards 3%," he said in a note to clients.

The poor payrolls report will heighten interest in U.S. data on inflation, retail sales and consumer sentiment.

Earnings will also be in focus as JP Morgan, Citigroup and Wells Fargo are among the first companies to release fourth-quarter results on Jan. 15.

The climb in yields in turn offered some support to the down-trodden dollar, which had edged up to 90.320 against a basket of currencies from last week's low of 89.206.

The euro pulled back to $1.2185 from a recent top of $1.2349, but has support around $1.2190. The dollar also firmed to 104.08 yen from a trough of 102.57 hit last week.

The sudden lift in bond yields undermined gold, which pays no interest, and the metal fell back to $1,844 an ounce from its recent peak at $1,959.

Oil prices held firm after reaching their highest in nearly a year on Friday, gaining 8% on the week after Saudi Arabia pledged to cut output.

Brent crude futures dipped 11 cents to $55.88, while U.S. crude futures added 2 cents to $52.26 a barrel.

(Editing by Sam Holmes)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

Norway imposes new restrictions to prevent new wave, says PM
World

Norway imposes new restrictions to prevent new wave, says PM

OSLO (Reuters) -Norway will impose fresh restrictions to prevent a resurgence in the spread of the coronavirus, Prime Minister Erna Solberg said on Sunday, including a nationwide ban on serving alcohol in restaurants and bars and not inviting guests home.

Indigenous Venezuelan man accused of raiding military post dies in jail: rights group
World

Indigenous Venezuelan man accused of raiding military post dies in jail: rights group

(Reuters) - A Venezuelan member of the Pemon indigenous group accused of aiding a raid on a military post in late 2019 died on Sunday in a jail close to capital Caracas, rights group Penal Forum said in a tweet. Salvador Franco died just weeks after family members and activists reported he was suffering from health problems.

Norway imposes new restrictions to prevent new COVID-19 wave, says PM
World

Norway imposes new restrictions to prevent new COVID-19 wave, says PM

OSLO (Reuters) - Norway will impose fresh restrictions to prevent a resurgence in the spread of the coronavirus, Prime Minister Erna Solberg said on Sunday, including a nationwide ban on serving alcohol in restaurants and bars and not inviting guests home.