In Asia, developments in Japanese markets bear monitoring, with yields hitting multi-year highs after Bank of Japan Governor Kazuo Ueda signaled interest rates will be raised again, but the yen still anchored near 160.00 per dollar.
The 10-year Japanese Government Bond yield on Monday hit 1.1350%, the highest since July 2011. Japan's finance ministry will auction 10-year bonds on Tuesday, and recently said it will raise the amount of five-year bonds to be sold early in the new fiscal year.
Japanese stocks, which last week touched their highest level since July last year, are feeling the heat from higher JGB yields. The Nikkei 225 index fell 1.5% on Monday, the biggest fall since Nov. 13.
Will Japanese stocks on Tuesday take their cue from the weak, export-friendly yen, or the multi-year peak in long-dated borrowing costs?
Investors in China will focus their attention once again on the two-year bond yield's flirtation with 1%, the weakening exchange rate, and Beijing's efforts to support the currency and stock markets in the face of slumping yields and persistent deflationary pressures.
The spot yuan is now through 7.33 per dollar for the first time since September 2023, getting closer to a break below 7.35 per dollar which would signal a new 17-year low.
Asia's economic calendar on Tuesday is light. The main releases will be inflation data from the Philippines and Taiwan, and China's latest FX reserves.
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