A global sell-off in bonds and equities spread to Asia, with investors on edge as central banks step up talk of tighter policy conditions. The yen fell as the Bank of Japan sought to rein in yields. With bearish comments from investors Jeffrey Gundlach and Ray Dalio adding to the impression of a potential sea change for bonds, yields rose across Asia -- spurring the BOJ to reinforce its cap on 10-year rates. German 10-year yields opened higher Friday morning after hitting 18-month highs Thursday, and Treasuries also slipped further. Asian equities retreated after the S&P 500 Index fell the most since May, while gold and oil fell. “Shares are vulnerable to a further short-term setback as we go through the seasonally weak September quarter. All eyes now turn to Friday’s U.S. jobs report, where a stronger-than-expected number may give further impetus to the selloff in bonds amid hawkish central bank comments. The ECB minutes furthered that trend, as policy makers last month opened the door to dropping from their message a long-standing pledge to expand or extend the bank’s bond-purchase program if necessary
While ADP Research Institute data showed companies adding fewer workers to U.S. payrolls in June than the prior month, a gauge of surprises from economic data this week staged its biggest rebound since March. Uncertainty surrounding U.S. government policy may be holding back economic growth because of its negative impact on business investment, Federal Reserve Vice ChairmanStanley Fischer said.
In Japan, the BOJ didn’t end up purchasing bonds after declaring a snap fixed-rate debt purchase operation. The announcement underscored how while European and U.S. central banks are discussing exit strategies, the BOJ intends to remain on an accommodative course for some time
Source: Bloomberg Pro Terminal
Trader I. Ivanov
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