US yields march higher, Asia stocks sag amid Fed angst
By Kevin Buckland
TOKYO (Reuters) — U.S. Treasury yields scaled fresh 16-year peaks on Tuesday, keeping the dollar near a 10-month high, as investors responded to the message from the Federal Reserve and other major central banks that rates are likely to stay elevated for longer.
Asia-Pacific stock benchmarks sagged along with gold, with European equities also set for a weaker open, while crude oil continued to drift back from 10-month highs.
The yield on 10-year Treasury notes rose as high as 4.566%, a level not seen since October 2007.
The U.S. dollar index — which measures the currency against six major developed market peers, including the euro and yen — ticked up 0.09% to 106.04, after reaching 106.10 overnight for the first time since Nov. 30.
MSCI's broadest index of Asia-Pacific shares slumped 0.66%.
Tokyo's Nikkei lost 0.93%, while Hong Kong's Hang Seng slipped 0.98% and mainland Chinese blue chips retreated 0.4%.
U.S. stock futures pointed 0.35% lower, following a 0.4% rise for the S&P 500 overnight. Pan-European STOXX 50 futures fell 0.17%.
Westpac strategists see risks skewed toward even higher yields in the near term, buoying the dollar.
«We expect 10-year yields to establish a new, higher, range in coming weeks,» with a possible peak around 4.75%, they wrote in a client note. «Medium term, we would be looking to get long at some stage, but that time is not yet upon us.»
The next target for the dollar index is 107.20, they said.
By contrast, IG analyst Tony Sycamore says technical indicators suggest a top for Treasury yields is close.
«I think that over the next three or four days, we're going to see yields start to come off, and U.S. equities could start to base,» he said. «But between now and then, it
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