(Bloomberg) — Treasuries fell as a Federal Reserve official emphasized that recent US economic data might delay the number of interest-rate cuts seen this year. Japanese stocks dragged down broader Asian equities.
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Yields on Treasuries advanced across tenors in early trading in Asia following Fed Governor Christopher Waller’s remarks after the Wednesday close that there is no rush to lower interest rates, and he wants to see “at least a couple months of better inflation data” before cutting. Two-year Treasury yields, which are more sensitive to policy moves, rose three basis points while the dollar strengthened against all of its Group-of-10 peers.
Shares in Japan slipped as they traded ex-dividend. The move also came after the Nikkei 225 index Wednesday advanced to near its record high. Meanwhile, Australian stocks climbed to a fresh record, while futures for benchmarks in Hong Kong pointed to gains.
Contracts for US equities were little changed in Asian trading after the S&P 500 closed at a record, with many institutional investors potentially rebalancing their portfolios.
In Asia, the yen will remain in focus. The currency steadied in early trading after pulling back from the lowest level since 1990. The yen had weakened to 151.97, beyond the level at which policymakers stepped in during October 2022.
“Market perception is they have drawn a line in the sand at 152,” said Paresh Upadhyaya, director of fixed income and currency strategy at Amundi Asset Management US. “The key question is their commitment.”
In commodities, oil climbed to head for a solid quarterly gain on expectations OPEC+ supply cuts would tighten the global market. Gold steadied Thursday after three sessions of gains.
The US government had its credit score affirmed by S&P Global Ratings at AA+, even as the country continues to face fiscal challenges. “Bipartisan cooperation to strengthen the US fiscal profile — namely to meaningfully lower deficits and tackle budgetary rigidities — remains elusive,” S&P said in a statement.
Meanwhile, after the S&P 500 soared about 25% since late October, many have flagged concern that positioning is stretched and stocks are more vulnerable to short-term profit taking.
“While we expect this bull market to continue, we wouldn’t be surprised if we see a 5%-7% correction,” said Gina Bolvin, president of Bolvin Wealth Management Group.
JPMorgan Chase & Co.’s Dubravko Lakos-Bujas warned clients on Wednesday that they could be “stuck on the wrong side” of the momentum trade when it eventually falters, and he encouraged them to consider diversifying their holdings and thinking about risk management in their portfolios. He also reiterated his warning that excessive crowding in the market’s best-performing stocks raises the risk of an imminent correction.
Key events this week:
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UK GDP revision, Thursday
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US University of Michigan consumer sentiment, initial jobless claims, GDP, Thursday
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Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday
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US personal income and spending, PCE deflator, Friday
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Good Friday. Exchanges closed in US and many other countries in observance of holiday. US federal government is open.
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San Francisco Fed President Mary Daly speaks, Friday
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Fed Chair Jerome Powell speaks, Friday
Stocks
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S&P 500 futures were little changed as of 9:15 a.m. Tokyo time
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Hang Seng futures rose 0.5%
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Japan’s Topix fell 0.8%
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Australia’s S&P/ASX 200 rose 0.7%
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Euro Stoxx 50 futures rose 0.2%
Currencies
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The Bloomberg Dollar Spot Index rose 0.1%
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The euro fell 0.2% to $1.0808
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The Japanese yen was little changed at 151.36 per dollar
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The offshore yuan was little changed at 7.2590 per dollar
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The Australian dollar fell 0.3% to $0.6517
Cryptocurrencies
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Bitcoin rose 0.9% to $69,475.85
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Ether fell 0.2% to $3,503.52
Bonds
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The yield on 10-year Treasuries advanced two basis points to 4.21%
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Japan’s 10-year yield was unchanged at 0.720%
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Australia’s 10-year yield declined two basis points to 3.98%
Commodities
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West Texas Intermediate crude rose 0.5% to $81.74 a barrel
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Spot gold fell 0.3% to $2,188.30 an ounce
This story was produced with the assistance of Bloomberg Automation.
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