Monday’s little increase in U.S. Treasury rates contributed to the dollar reaching a new one-year high versus the yen while putting an early tech-led equities surge on hold.
Benchmark 10-year Treasury rates surged to a one-week high of 4.668%, reaching the upper end of their range since early-month speculations for earlier Federal Reserve rate reduction were fuelled by weak non-farm job data.
Although the dollar remained steady versus the euro and pound, it rose to 151.78 yen for the first time since mid-October of last year.
The tech-heavy Nikkei in Japan ended the day nearly flat, giving up early gains of over 1%.
Tech continued to beat the drag from a 1.2% decline in an index of real estate equities, helping Hong Kong’s Hang Seng stay afloat. Blue chips from China’s mainland decreased by 0.24%.
U.S. equities futures were down 0.44% as well, after the S&P 500 had risen 1.56% on Friday.
Naka Matsuzawa, a strategist at Nomura Securities, predicted that stocks are probably nearing their high.
“Up until now the market has been taking bad economic news as good news, because that would mean a pause in Fed rate hikes,” he stated.
However, he continued, “there isn’t much room for Treasury yields to fall further because the Treasury market has already priced in a pause.” This takes away the stock market’s support. “In short, I don’t think the stock market rally is going to continue.”
This week is jam-packed with high-risk events, including the release of US retail sales data on Tuesday and consumer inflation on Wednesday. Chinese retail sales are also scheduled for release on Wednesday, following a dismal showing during the annual Singles Day shopping festival this past weekend.
The major geopolitical event takes place in the middle of the week, when Chinese leader Xi Jinping and US President Joe Biden meet in San Francisco for the Asia-Pacific Economic Cooperation (APEC) conference.
However, Moody’s statement late on Friday that it had downgraded the U.S. credit rating from “stable” to “negative” attracted little notice from investors.
Crude oil prices decreased on Monday due to slower growth in China and the United States, which overshadowed supply concerns.
While U.S. West Texas Intermediate (WTI) oil futures for December were down 68 cents, or 0.88%, at $76.49 a barrel, Brent crude futures for January were down 71 cents, or 0.87%, at $80.72 a barrel.