Asian Stocks Drop as Bonds Continue to Sell Off – Asia Market Wrap

Asian equities and bonds fell for the second day in a row, as traders tempered their expectations of Fed rate reduction for the rest of the year.

The MSCI AC Asia Pacific Index dropped up to 1.1% as benchmarks in Australia and Japan dipped while Chinese markets rose. That comes after US shares fell from practically overbought levels after a steady climb to all-time highs.

Treasuries’ 10-year yields rose 11 basis points to 4.20% on Monday, after Fed’s Schmid said he prefers a slower pace of interest-rate cuts due to uncertainties about how low the US central bank should eventually cut rates. Bonds in Australia and New Zealand declined.

The currency markets are on edge after the Yen fell against the dollar, reaching 151 per Dollar on Tuesday.

Gold steadied after reaching a new high the previous day, as traders digested Fed policymakers’ views on US interest rates. Oil fell modestly after jumping nearly 2% on Monday amid Middle East tensions.