Treasuries drop on Fed-speak, Chinese stocks climb: Markets wrap

Treasuries slipped as a Federal Reserve official emphasized that recent US economic data might delay the number of interest-rate cuts seen this year.

An Asia-Pacific equity gauge was little changed as gains among Hong Kong and mainland Chinese stocks offset losses in Japan. Shares of Hon Hai Precision Industry Co. — which makes iPhones for Apple — soared in Taiwan as artificial-intelligence mania outweighed concerns over a sluggish recovery in the smartphone sector.

Yields on Treasuries climbed across tenors 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 nearly four basis points. The dollar strengthened against all of its Group-of-10 peers.

“We believe that the current market easing expectations for the Fed still need to adjust,” Win Thin and Elias Haddad, strategists at Brown Brothers Harriman, wrote in a note. “When they do, the dollar should gain even further.”

Japanese shares were the worst performers in Asia as they traded ex-dividend. Contracts for US equities were flat after the S&P 500 closed at a record, with many institutional investors potentially rebalancing their portfolios. Thursday is the last trading day of the quarter for some markets.

The yen steadied after pulling back from the lowest level since 1990. The Japanese currency had weakened to 151.97, beyond the level at which policymakers stepped in during October 2022.

A summary of opinions from the Bank of Japan’s policy meeting last week shows that officials discussed the need to stay cautious in their approach toward further interest rate hikes.

“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 a three-day rally.

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. 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.

Key events this week:

UK GDP revision, Thursday
US University of Michigan consumer sentiment, initial jobless claims, GDP, Thursday
Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday
US personal income and spending, PCE deflator, Friday
Good Friday. Exchanges closed in US and many other countries in observance of holiday. US federal government is open.
San Francisco Fed President Mary Daly speaks, Friday
Fed Chair Jerome Powell speaks, Friday

Stocks

S&P 500 futures were little changed as of 1:35 p.m. Tokyo time
Nikkei 225 futures (OSE) fell 0.4%
Japan’s Topix fell 1.4%
Australia’s S&P/ASX 200 rose 1%
Hong Kong’s Hang Seng rose 1.6%
The Shanghai Composite rose 1.1%
Euro Stoxx 50 futures rose 0.4%

Currencies

The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0823
The Japanese yen was little changed at 151.35 per dollar
The offshore yuan was little changed at 7.2488 per dollar
The Australian dollar was little changed at $0.6533

Cryptocurrencies

Bitcoin rose 1% to $69 545.04
Ether fell 0.1% to $3,505.79

Bonds

The yield on 10-year Treasuries advanced two basis points to 4.21%
Japan’s 10-year yield declined two basis points to 0.700%
Australia’s 10-year yield declined three basis points to 3.97%

Commodities

West Texas Intermediate crude rose 0.4% to $81.70 a barrel
Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.