Most Asian stocks rose on Wednesday as the selling pressure on US bonds took a break.
After the Bank of Japan's unlimited bond purchase decision, the MSCI Asia Pacific Index rose after three days of decline. Japanese Nikkei 225, Hong Kong Hang Seng on the plus.
The Chinese CSI 300, on the other hand, diverges negatively. The People's Bank of China announced that despite its previous calls for discounts, banks kept the 1-year loan reference rate at 3.70 percent and the 5-year loan reference rate at 4.60 percent. The discount was expected in the Bloomberg survey.
Rising real yields in the US pushed the Chinese yuan to a 6-month low. Although the Japanese yen rallied a bit this morning, it remains the weakest performing G-10 currency this year, driven by the loose BOJ monetary policy.
U.S. futures indexes are down as Netflix's first-quarter balance sheet was disappointing. In the first quarter, Netflix lost subscribers for the first time in 10 years. Shares of Netflix, of which 200,000 subscribers left, fell 26 percent in futures after the closing.
The dollar remains weak despite US real yields turning positive. The Dollar Index fell 0.28 percent to 1.216. Oil prices, which fell to the lowest level in about two weeks for a while, announced that crude oil stocks in the USA fell last week and global
rebounded with expectations about demand.
US real bond yields
US bond markets made an important step in returning to pre-pandemic normalcy.
The yield on 10-year inflation-protected (TIPS) bonds has moved into positive territory for the first time since 2020. The 10-year U.S. bond yield also approached 3 percent, its highest level since 2018, as investors priced in aggressive rate hikes from the U.S. Federal Reserve.
Nomura Inc. Strategist Andrew Ticehurst said, “This means that we have started to leave behind the pandemic crisis and the monetary policy steps taken to overcome the crisis in this period and are now back to more normal levels.
It means we are back.”
According to Ticehurst, “The aggressive increase in US 10-year bond yields is mainly due to higher real yields rather than higher inflation expectations.”
shows that the increase in the number of interest rate hikes helps to balance the rising inflation expectations.
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