Asian markets are trading mixed this morning after U.S. bond yields briefly topped 4% overnight, weighing on equities in the region. The 10-year Treasury yield rose to its highest level since 2011 as investors reacted to a stronger-than-expected reading of inflation data from the United States last week and expectations that economic growth will remain strong throughout 2021.
The rise in bond yields has caused some concern among investors about how higher borrowing costs could affect corporate earnings and stock prices going forward, leading to a selloff in riskier assets, such as stocks across Asia Pacific markets today. In Japan, the Nikkei 225 index is down 0.6%, while South Korea’s KOSPI index is off by 0.4%. Australia’s S&P/ASX 200 Index has also declined by 1%.
However, not all Asian markets have been affected by rising U.S. debt yields; Chinese stocks were up slightly despite concerns over rising government debt levels there due to increased stimulus spending over recent months, which has helped support economic activity during the pandemic period. Hong Kong’s Hang Seng Index was also largely unchanged with gains seen across several sectors including energy and financial services offsetting losses elsewhere on tech-related issues, such as Tencent Holdings Ltd., which fell 2%.
Overall, it appears that while some Asian Pacific markets may be feeling pressure from higher US debt yields at present, others seem more resilient suggesting that any impact may be limited for now but could become more pronounced should these trends continue into next week or beyond.
Read more at CNBC
