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Short-End Treasuries Fall, Asia Stocks Fluctuate: Markets Wrap

Published 02/20/2018, 11:22 PM
Updated 02/20/2018, 11:30 PM
© Bloomberg. Employees work at the Tokyo Stock Exchange (TSE), operated by Japan Exchange Group Inc. (JPX), in Tokyo, Japan, on Friday, Dec. 29, 2017. Japan’s Topix index capped its best annual performance since 2013, though it ended the last trading day of the year lower as some investors adjusted their positions in thin trading before the New Year holidays.

(Bloomberg) -- Asian stocks swung between gains and losses as U.S. equity futures pared gains while shorter-dated U.S. Treasuries extended declines amid a massive debt issuance. The dollar continued to strengthen.

Japanese shares fluctuated as S&P 500 Index futures turned lower, while Australian stocks were little changed. Stocks rose in Hong Kong. The S&P 500 Index closed below its average price for the past 50 days after Walmart (NYSE:WMT) plunged the most since 1988. Yields on two-year Treasuries built on earlier gains, when the U.S. Treasury sold $179 billion of securities. The yen continued its retreat from recent highs.

The Treasury’s $258 billion of auctions slated for this week comes amid surging rates that gave impetus to one of the steepest equity selloffs in years two weeks ago. While investors seem to have adjusted to 10-year rates at a four-year high for now, the deluge of supply could push yields higher, weakening the case for owning stocks at elevated valuations.

Investors will also get to parse minutes this week from the most recent meetings of both the Federal Reserve and the European Central Bank.

Elsewhere, oil in New York traded below $62 a barrel ahead of U.S. government data that’s forecast to show crude inventories gained for a fourth week. Bitcoin dropped back under $11,000.

Terminal users can read more in our markets blog.

Here are some key events scheduled for this week:

  • The Federal Reserve will release minutes on Wednesday of its Jan. 30-31 meeting, Janet Yellen’s last as chair, where officials kept the rate unchanged.
  • Fed policy makers speaking this week include New York Fed President William Dudley and Atlanta Fed President Raphael Bostic. Cleveland Fed President Loretta Mester is among speakers at the U.S. Monetary Policy Forum in New York City.
  • Companies announcing earnings this week include Glencore (LON:GLEN), Woolworths, Barclays (LON:BARC) and Royal Bank of Scotland (LON:RBS).
  • Chinese markets reopen on Thursday after holidays.
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These are the main moves in markets:

Stocks

  • Japan’s Topix index fell 0.4 percent as of 1:10 p.m. in Tokyo. The Nikkei 225 Stock Average was down 0.2 percent.
  • Australia’s S&P/200 Index was little changed.
  • Hong Kong’s Hang Seng Index gained 0.9 percent.
  • Futures on the S&P 500 fell 0.2 percent. The underlying measure fell 0.6 percent.
  • The MSCI Asia Pacific Index was down 0.1 percent.
  • The MSCI Emerging Market Index rose 0.5 percent after declining 0.5 percent on Tuesday, the biggest drop in more than a week.

Currencies

  • The Bloomberg Dollar Spot Index gained 0.2 percent to the highest in a week.
  • The yen slid 0.4 percent to 107.70 per dollar. It has weakened from a high of 105.55 on Feb. 16, the lowest level since November 2016.
  • The euro was trading at $1.2331.

Bonds

  • The yield on 10-year Treasuries was steady at 2.90 percent.
  • The 2-year yield rose four basis points to 2.26 percent, the highest since 2008.
  • Australia’s 10-year yield fell two basis points to 2.88 percent.

Commodities

  • West Texas Intermediate crude fell 1.1 percent to $61.22 a barrel.
  • Gold fell 0.2 percent to $1,326.45 an ounce.

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