Friday 26th February 2021: Bond yields wreck havoc on markets

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Global Markets:

  • Asian Stock Markets : Nikkei down 3.99%, Shanghai Composite down 2.12%, Hang Seng down 3.55%, ASX down 2.35%
  • Commodities : Gold at $1765.50 (-0.56%), Silver at $26.95 (-2.50%), Brent Oil at $65.47 (-0.97%), WTI Oil at $62.90 (-0.99%)
  • Rates : US 10-year yield at 1.468, UK 10-year yield at 0.746, Germany 10-year yield at -0.278

News & Data:

  • (CHF) KOF Economic Barometer 102.7 vs 96.5 expected
  • (USD) Prelim GDP q/q 4.10% vs 4.20% expected
  • RBNZ Orr: We Will Not Be Changing Policy For A Prolonged Period Of Time
  • US Dollar Soars as Surging Yields Attract Massive Demand

Markets Update:

Asian stocks hit one-month lows on Friday as a rout in global bond markets sent yields flying and sapped investors’ appetite for riskier assets.

In Japan, the Nikkei 225 led losses among the region’s major markets as it fell 4% while the Topix index slipped 3.2%. Mainland Chinese stocks also fell on the day: The Shanghai composite was down 2.1% while the Shenzhen component slipped 2.2%. South Korea’s Kospi dropped 2.8%. Hong Kong’s Hang Seng index plunged 3.6%.

The surge in Treasury yields also caused ructions in emerging markets, which feared the better returns on offer in the United States might attract funds away. Markets were hedging the risk of an earlier rate hike from the Federal Reserve, even though officials this week vowed any move was long in the future. Fed fund futures are now almost fully priced for a rise to 0.25% by January 2023, while Eurodollars have it discounted for June 2022.

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