Bond Rally Propelled by Intensifying Global Stock Surge – Asia Market Wrap
On Monday, a worldwide stock selloff continued as concerns rose that the Fed is falling behind the curve with policy assistance for a faltering US economy, pushing investors into bond markets. Japanese stocks fell as speculators priced in further domestic rate hikes.
The Topix and Nikkei indexes were on the verge of a bear market, with the former forecasting a three-day drop that would be the greatest since the 2011 Fukushima nuclear disaster. The Yen rose more than 2% against the dollar. A regional stock index fell the most in more than four years, erasing gains from 2024. US index futures have also dropped.
On Friday, US nonfarm payrolls posted one of the lowest readings since the pandemic, and the unemployment rate unexpectedly rose over the Fed’s year-end prediction, triggering a frequently monitored recession signal. Concerns over the health of the US economy pushed Treasury rates lower, while Asia’s investment-grade dollar bond spreads were expected to widen the most in 22 months.
Japan’s benchmark 10-year bond yield plummeted to its lowest level since April, dropping as much as 17 basis points to 0.785% on Monday. Mitsubishi’s shares fell to their lowest intraday level on record, as falling bond yields threatened to eat into loan margins.
