February 29, 2024
Finance

Treasuries Fall on Powell, Chinese Shares Decline: Markets Wrap


(Bloomberg) — Treasuries extended Friday’s selloff after Federal Reserve Chair Jerome Powell said policymakers will likely wait beyond March before cutting interest rates. Chinese equities slid as market jitters persisted despite signs of official support.

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The US 10-year yield climbed around five basis points, adding to its 14 basis-point advance Friday following stronger-than-expected payroll data. The “danger of moving too soon is that the job’s not quite done,” Powell said in an interview on CBS’s 60 minutes.

The Treasury declines rippled across Asian bond markets, weighing on government debt in Australia and New Zealand, where yields rose around 10 basis points. Chinese government bonds were an outlier, where 10-year yields fell around two basis points.

China’s benchmark CSI 300 share index dropped more than 1%, while the CSI 1000 gauge of small caps slipped almost 7%. The declines came despite a statement on Sunday from the China Securities Regulatory Commission saying it would act to prevent abnormal fluctuations, and guide more medium- and long-term funds into the market.

Benchmarks in Australia and South Korea also fell. US equity futures drifted lower after the S&P 500 Index climbed 1.1% to a new record on Friday. A strong run of performances for the US benchmark comes as February begins — historically one of the rockiest month of the year for US stocks.

Japanese equities bucked the trend by rising. Mitsui Fudosan shares jumped after the Financial Times reported Elliott Management had acquired a 2.5% stake in the business and was calling for a share buyback.

The dollar strengthened against most of its major peers. The yen edged lower to trade at around 148 per dollar.

Investor bets for a rate cut in March by the Fed tumbled Friday to around 20% from almost 40% on Thursday, as economic resilience reduces the likelihood of imminent policy easing.

Five Cuts

Despite forecasts for a March cut weakening, “this market still expects five rate cuts this year,” Ed Yardeni, president of Yardeni Research wrote in a note. “Fed officials are likely to continue to push back against that notion of so much cutting.”

Oil was little changed as traders assessed the impact of US and UK strikes against Houthi targets over the weekend. The Iran-backed Houthis have vowed to respond. West Texas Intermediate was little changed, after falling 7.4% last week, its largest one-week decline since October. Gold fell slightly to trade at around $2,037 per ounce.

Former US President Donald Trump also signaled he may impose a tariff on Chinese goods of more than 60% if elected, in a fresh round of hawkish rhetoric aimed at the largest supplier of goods to the US.

Key events this week:

  • Eurozone S&P Global Services PMI, PPI, Monday

  • Australia rate decision, Tuesday

  • Eurozone retail sales, Tuesday

  • Germany factory orders, Tuesday

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

  • Fed Governor Adriana Kugler, Richmond Fed President Tom Barkin speak, Wednesday

  • Bank of England Deputy Governor Sarah Breeden speaks, Wednesday

  • CPI data for Brazil, China, Russia, Thursday

  • US initial jobless claims, Thursday

  • US Treasury Secretary Janet Yellen speaks at a Senate banking committee hearing, Thursday

  • Pakistan general election, Thursday

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

  • European Central Bank publishes economic bulletin, Thursday

  • Canada unemployment, Friday

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

  • Germany CPI, Friday

  • Australian Reserve Bank Governor Michele Bullock delivers parliamentary testimony, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures fell 0.3% as of 11:41 a.m. Tokyo time

  • Nasdaq 100 futures fall 0.3%

  • Japan’s Topix rose 0.8%

  • Australia’s S&P/ASX 200 fell 0.9%

  • Hong Kong’s Hang Seng fell 0.7%

  • The Shanghai Composite fell 2.6%

  • Euro Stoxx 50 futures were little changed

Currencies

  • The Bloomberg Dollar Spot Index rose 0.2%

  • The euro was little changed at $1.0778

  • The Japanese yen was little changed at 148.45 per dollar

  • The offshore yuan was little changed at 7.2118 per dollar

Cryptocurrencies

  • Bitcoin fell 0.9% to $42,384.43

  • Ether fell 0.9% to $2,278.36

Bonds

  • The yield on 10-year Treasuries advanced five basis points to 4.07%

  • Japan’s 10-year yield advanced 5.5 basis points to 0.715%

  • Australia’s 10-year yield advanced 11 basis points to 4.09%

Commodities

  • West Texas Intermediate crude was little changed

  • Spot gold fell 0.2% to $2,035.67 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Garfield Reynolds.

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©2024 Bloomberg L.P.



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