Stocks, US Futures Rise; Treasury Yields Advance: Markets Wrap

(Bloomberg) — Stocks climbed in Asia on Tuesday and US equity futures pointed higher as investor sentiment stabilized. Treasuries retreated after reopening from a holiday.

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Japanese shares led gains, with Australia and South Korea also in the green. Markets are bouncing after the worst drop in global stocks last week since 2020.

The drop in Treasuries took the benchmark 10-year yield to about 3.28%. Further volatility in bonds, under a Federal Reserve intent on sharp interest-rate hikes to tame inflation, could shake global markets anew.

Australian yields increased after central bank Governor Philip Lowe reiterated that further interest-rate hikes likely loom.

Investors continue to monitor China’s Covid flareups and its efforts to shore up economic growth. The yen remains around a 24-year low against the dollar, sapped by the contrast between a super-dovish Bank of Japan and hawkish Fed.

In commodities, oil gained, while prices for metals like copper are being buffeted by concerns about the demand outlook amid weakening global growth.

St. Louis Fed President James Bullard warned that US inflation expectations could “become unmoored without credible Fed action,” while former Treasury Secretary Lawrence Summers argued that the nation’s jobless rate would need to rise above 5% for a sustained period in order to curb price pressures. Those comments underline the parlous backdrop investors face.

“There might be a narrative that we’ve hit a bottom, we are oversold, the Fed is taking inflation seriously and that might be slightly bullish in the interim,” Frances Stacy, Optimal Capital director of strategy, said on Bloomberg TV.

Earlier, European Central Bank President Christine Lagarde restated officials’ intention to raise interest rates in July and September, signaling that concerns over financial-market tensions aren’t derailing the fight against inflation.

Elsewhere, Bitcoin held above $20,000 after a turbulent period for cryptocurrencies.

What to watch this week:

  • RBA minutes, Governor Philip Lowe due to speak, Tuesday

  • Fed Chair Jerome Powell semi-annual Senate testimony, Wednesday

  • Bank of Japan April minutes, Wednesday

  • Powell US House testimony, Thursday

  • US initial jobless claims, Thursday

  • PMIs for Eurozone, France, Germany, UK, Australia, Thursday

  • ECB economic bulletin, Thursday

  • US University of Michigan consumer sentiment, Friday

  • RBA’s Lowe speaks on panel, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures rose 1.1% as of 9:30 a.m. in Tokyo

  • Nasdaq 100 futures rose 1.2%

  • Japan’s Topix index increased 1.4%

  • Australia’s S&P/ASX 200 Index added 0.9%

  • South Korea’s Kospi index rose 0.6%

Currencies

  • The Bloomberg Dollar Spot Index fell 0.1%

  • The euro was at $1.0527, up 0.2%

  • The Japanese yen was at 135.04 per dollar

  • The offshore yuan was at 6.6841 per dollar

Bonds

  • The US 10-year Treasury yield rose five basis points to 3.28%

  • Australia’s 10-year bond yield rose five basis points to 4.12%

Commodities

  • West Texas Intermediate crude rose 1.6% to $111.27 a barrel

  • Gold was little changed at $1,841 an ounce

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