The 10-year US Treasury bond yield is rising yet again, at 1.48%, or 0.06% higher. Rising yields on the back of expectations for higher interest rates have recently been weighing on markets.
Investors are unnerved by inflation worries, having become accustomed to rock-bottom rates that make stocks look attractive by comparison. They fear that if the economy heats up too much, inflation may pick up.
The rout in Chinese markets came as the country prepares for “Two Sessions,” its biggest political gathering of the year. Premier Li Keqiang is expected to outline major policy goals for the country on Friday.
“Any focus on the [Chinese] authorities leaning against leverage via policy tightening will be closely watched” this week, wrote Stephen Innes, chief global markets strategist at Axi, in a Thursday note.
“We are really afraid the bubble for foreign financial assets will burst someday,” Guo told reporters in Beijing earlier this week. He added that broader rallies in US and European markets don’t reflect the underlying economic challenges facing both regions as they try to recover from the brutal pandemic recession.
Investors are also awaiting a speech from Federal Reserve Chairman Jerome Powell.
“Markets will be looking for signals from Mr. Powell regarding his comfort with rising bond yields, inflation, and any signs of potential changes in Fed guidance,” wrote Jeffrey Halley, senior market analyst for Asia Pacific at Oanda, in a Thursday note. He will have to choose his words very carefully.”
— Anneken Tappe contributed to this report.
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