Reuters: Asia-Pacific bond yields followed U.S. Treasury yields higher on Wednesday, and the dollar continued to rise after Fed policymakers said they aren’t done raising rates.
Yields rose after U.S. House Speaker Nancy Pelosi’s safe arrival in Taiwan, despite China’s warnings to act against the breakaway territory. The yen fell more.
Despite Wall Street’s overnight decline, Asian equities rose.
Japan’s Nikkei rose 0.5%, rebounding from Tuesday’s two-week low, while Chinese blue chips jumped 0.86% and Hong Kong’s Hang Seng climbed 0.76%.
“Hong Kong and Chinese shares have recovered roughly a third of yesterday’s losses,” says Steven Leung, executive director for institutional sales at UOB Kay Hian in Hong Kong.
Military activities after Pelosi’s departure will make investors apprehensive.
On Tuesday, a trio of Fed policymakers signalled that the tightening drive to tame the highest inflation since the 1980s will continue, despite the fact that it will significantly reduce economic activity.
Mary Daly and Charles Evans are considered doves.
Traders expect the Fed to raise rates by 75 basis points at its September meeting.
In Tokyo, benchmark long-term Treasury rates were around 2.71 percent, close to the overnight high of 2.774 percent.
The dollar-yen rate, which follows U.S. rates, rose 0.3% to 133.57, extending Tuesday’s 1.2% gain.
The U.S. dollar index, which measures the dollar against the yen and five other major peers, rose 0.04 percent to 106.41 after falling 1 percent overnight to 105.03.
Bonds and the yen, traditional safe havens, lost some shine after Pelosi’s visit to Taiwan was met with strong words and the news of live-fire military drills by Beijing.
After falling 0.68 percent the day before, gold rose 0.13 percent to $1,762.09 per ounce.
MSCI’s broadest index of Asia-Pacific shares rose 0.11 percent, supported by Japan’s rebound from Tuesday’s two-week closing low.
China’s CSI 300 rebounded following a sharp drop in the previous session. Tech stocks boosted Hong Kong’s Hang Seng by 1.8%.
Taiwan’s benchmark remained flat, while Australian shares fell 0.52 percent, ending a six-day winning streak.
Following the S&P 500’s 0.67 percent dip overnight, U.S. stock futures rose 0.07 percent.
