Stocks, US Futures Rise; Treasury Yields Advance: Markets Wrap

(Bloomberg) -- Stocks climbed in Asia on Tuesday, US equity futures pointed higher and Treasuries retreated amid steadier investor sentiment compared with last week’s rout in global shares.

MSCI Inc.’s Asia-Pacific index snapped an eight-day slide. Japanese and Hong Kong equities led gains, while China was more subdued as traders assessed the possible impact of Covid outbreaks.

The drop in Treasuries took the benchmark 10-year yield toward 3.30%. Further volatility in bonds, under a Federal Reserve intent on sharp interest-rate hikes to tame inflation, could shake global markets anew.

Australian yields pared or reversed increases -- central bank Governor Philip Lowe reiterated additional interest-rate hikes are likely but pushed back on expectations of a 75 basis points move in July. 

The dollar dipped and the yen hovered near a 24-year low, sapped by the contrast between a super-dovish Bank of Japan and a hawkish Fed. 

“There might be a narrative that we’ve hit a bottom, we are oversold, the Fed is taking inflation seriously and that might be slightly bullish in the interim,” Frances Stacy, Optimal Capital director of strategy, said on Bloomberg TV.

But investors continue to face a parlous longer-term outlook. St. Louis Fed President James Bullard warned that US inflation expectations could “become unmoored without credible Fed action,” while former Treasury Secretary Lawrence Summers argued that the nation’s jobless rate would need to rise above 5% for a sustained period in order to curb price pressures. 

Earlier, European Central Bank President Christine Lagarde restated officials’ intention to raise interest rates in July and September, signaling that concerns over financial-market tensions aren’t derailing the fight against inflation.

Elsewhere, crude oil gained and gold was little changed. Bitcoin held above $20,000 after a turbulent period for cryptocurrencies.

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What to watch this week:

• RBA minutes, Governor Philip Lowe due to speak, Tuesday
• Fed Chair Jerome Powell semi-annual Senate testimony, Wednesday
• Bank of Japan April minutes, Wednesday
• Powell US House testimony, Thursday
• US initial jobless claims, Thursday
• PMIs for Eurozone, France, Germany, UK, Australia, Thursday
• ECB economic bulletin, Thursday
• US University of Michigan consumer sentiment, Friday
• RBA’s Lowe speaks on panel, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 1.7% as of 12:42 p.m. in Tokyo
• Nasdaq 100 futures rose 1.7%
• Japan’s Topix index increased 2%
• Australia’s S&P/ASX 200 Index added 1.4%
• South Korea’s Kospi index rose 1%
• Hong Kong’s Hang Seng Index added 1.6%
• China’s Shanghai Composite Index rose 0.2%
• Euro Stoxx 50 futures rose 0.6%

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%
• The euro was at $1.0529, up 0.2%
• The Japanese yen was at 135.04 per dollar
• The offshore yuan was at 6.6808 per dollar, up 0.1%

Bonds

• The US 10-year Treasury yield rose five basis points to 3.28%
• Australia’s 10-year bond yield was at 4.08%

Commodities

• West Texas Intermediate crude rose 2.2% to $112.01 a barrel
• Gold was little changed at $1,840.61 an ounce

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