Treasuries fall on Powell, Chinese stocks swing: Markets wrap

(Bloomberg) — Treasuries fell, extending the selloff Friday after Federal Reserve Chairman Jerome Powell said policymakers will likely wait until after March before cutting interest rates. Chinese stocks witnessed more violent fluctuations after official support signals.

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US 10-year bond yields rose five basis points in Asia after jumping 14 basis points on Friday following the release of stronger-than-expected payrolls data. “The danger of acting too early is that the job is not yet complete,” Powell said in an interview with CBS's 60 Minutes program that aired on Sunday in the United States.

The declines in Treasuries sent ripples through Asian bond markets, dragging down government debt in Australia and New Zealand. Chinese government bonds were an exception, with 10-year bond yields falling by about 2 basis points.

Chinese stocks had another volatile session as investors took stock of recent pledges by policymakers to stabilize a slumping stock market. The China Securities Regulatory Commission issued another statement on Monday, saying it would take measures to prevent the risks of pledging shares. On Sunday, she pledged to work to prevent abnormal fluctuations and channel more money into the market. The benchmark CSI 300 index oscillated between losses of 2.1% and gains of 1.7%.

“It is not yet clear whether or not today will mark the bottom for Chinese stocks, but it certainly feels as if we are hitting the bottom as policymakers have signaled they no longer want to see further declines,” said strategist David Zhao. At Invesco Asset Management in Singapore.

Stock indexes in Australia and South Korea as well as US stock futures fell after the S&P 500 rose 1.1% to a new record high on Friday. The US index's strong run of performance comes at the beginning of February – historically, one of the most turbulent months of the year for US stocks. European stock futures were little changed.

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The dollar rose against most of its major counterparts after Powell's hawkish comments. The yen fell to trade at around 148 yen to the dollar.

Investors' bets on a Fed rate cut in March fell on Friday to about 20% from about 40% on Thursday, as economic resilience reduces the likelihood of an imminent policy easing.

Despite expectations of a weak rate cut in March, “this market is still anticipating five rate cuts this year,” Ed Yardeni, president of Yardeni Research, wrote in a note. “Fed officials will likely continue to push back against the idea of ​​a deep cut.”

Oil prices rose as the United States pledged more strikes against Iranian forces and their proxies, while the Houthis promised revenge for bombing over the weekend. Double gold.

Former US President Donald Trump also indicated that he might impose tariffs on Chinese goods of more than 60% if elected, in a new round of tough rhetoric targeting the largest supplier of goods to the United States.

Main events this week:

• Eurozone S&P Global Services PMI, Producer Price Index, Monday

• Australian interest rate decision, Tuesday

• Retail sales in the euro zone, Tuesday

• German factory orders today, Tuesday

• Cleveland Fed President Loretta Mester and Philadelphia Fed President Patrick Harker speak Tuesday

• Bank of England Deputy Governor Sarah Breeden speaks on Wednesday

• Fed Governor Adriana Kugler and Richmond Fed President Tom Barkin speak on Wednesday

• China Producer Price Index, Consumer Price Index, Thursday

• Pakistani general elections, Thursday

• ECB Chief Economist Philip Lane and ECB Governing Council member Pierre Wunsch speak on Thursday

• The European Central Bank publishes its economic bulletin on Thursday

• Initial unemployment claims in the US, Thursday

• US Treasury Secretary Janet Yellen speaks at a Senate Banking Committee hearing on Thursday

• Reserve Bank of Australia Governor Michael Bullock testifies before Parliament on Friday

• China total financing, money supply, new yuan loans, Friday

• German Consumer Price Index, Friday

Some key movements in the markets:

Stores

• S&P 500 futures were down 0.2% as of 6:30 a.m. London time. The S&P 500 rose 1.1% on Friday

• Nasdaq 100 futures fell 0.2%. The Nasdaq 100 rose 1.7%.

• Euro Stoxx 50 futures were little changed

• Japan's Topix index rose 0.7%.

• The Hang Seng Index in Hong Kong rose 0.2%

• China's Shanghai Composite Index fell 0.6%

• Australia's S&P/ASX 200 index fell 1%.

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%.

• There was little change in the euro at $1.0781

• There was little change in the Japanese yen at 148.31 to the dollar

• There was little change in the yuan in external transactions at 7.2123 to the dollar

• There was little change in the Australian dollar at 0.6515 US dollars

• The British pound fell 0.1 percent to $1.2614

Digital currencies

• Bitcoin fell 0.1% to $42,702.96

• Ethereum fell 0.2% to $2,295.59

Bonds

• The yield on the 10-year Treasury note rose four basis points to 4.06%.

• The yield on 10-year Japanese bonds rose by 5.5 basis points to 0.715%.

• The yield on Australian 10-year bonds rose by 12 basis points to 4.10%.

Goods

• West Texas Intermediate crude rose 0.3% to $72.53 a barrel

• Gold in spot transactions fell 0.5 percent to $2,030.14 per ounce

This story was produced with assistance from Bloomberg Automation.

–With assistance from Richard Henderson and Ishika Mukherjee.

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