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SYDNEY (Reuters) – Global bond markets were tense on Tuesday amidst the headwinds of central bank tightening and the risk of a robust U.S. economic growth steadily in the week, though stellar results from the giant Alphabet supported tech stocks in Asia.
A man looks at an electronic stock quotation board outside a brokerage in Tokyo, Japan February 9, 2018. REUTERS / Toru Hanai
Shares in the parent of Google climbed 3.6 percent after hours to hit a record high, valuing the group at a cool $ 870 billion.
That made up for an otherwise dull day on Wall Street where the Dow eased 0.06 percent, while the S & P 500 gained 0.18 percent and the Nasdaq 0.28 percent.
In Asia, Shanghai shares would be more vigorous tax policy, including company tax cuts.
Chinese blue chips rose 1.6 percent to a one-month high, while MSCI's broadest index of Asia-Pacific shares outside Japan added 0.47 percent.
Japan's Nikkei edged up 0.5 percent even as a disappointing reading on local factory activity suggested the threat of a trade war was starting to bite.
Bond bulls were still smarting from the speculation that the Bank of Japan is close to announcing massive monetary stimulus, a risk that has lifted long-term borrowing costs globally.
Markets were worried that offshore investors would have an incentive to hunt offshore for yield, said ANZ economist Felicity Emmett.
"The 10 basis-point steepening in the Japanese yield curve is a massive change in the base rate," she added.
"It is a very important issue for the United States."
As a result, 10-year US Treasury yields 2.96 percent and were again nearing the psychological 3 percent bulwark.
GDP GUESSING GAMES
U.S. economic growth (GDP) due to the shift in yields in the United States.
Dealers noted some media reports President Donald Trump himself was predicting an outcome of 4.8 percent. That would not be out of bounds given the much-watched Atlanta Fed GDP tracker puts growth at an annualized 4.5 percent.
Such a strong outcome would only add to the risk of the Federal Reserve and underpin the dollar.
Against a basket of currencies, the dollar was hovering at 94.607 compared to a low of 94.207 on Monday. It bought 111.22 yen, against Monday's trough of 110.75.
The euro lapsed to $ 1.1690, with a profit of $ 1.1750 overnight.
China's yuan went the other way, slipping to a one-year low on the dollar with Beijing saying its value is driven by market forces.
In commodity markets, easter and escalating tensions between the U.S. and Iran. [O/R]
U.S. crude lost 16 cents to $ 67.73, while Brent dipped 23 cents to $ 72.83 a barrel.
Spot gold was a lower fraction at $ 1,222.82.
Reporting by Wayne Cole; Editing by Shri Navaratnam and Eric Meijer
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