* Treasury yields rise, lifting dollar, weighing on gold,
oil
* Yen at nine-month low as traders eye intervention cues
* MSCI world index at five week low, STOXX down 0.35%
* Payment firm Adyen shares fall 20%
*
SINGAPORE/LONDON, Aug 17 (Reuters) – The U.S. 10-year
treasury yield on Thursday reached its highest in 10 months,
underpinned by fears that U.S. interest rates might stay higher
for longer, contributing, along with China’s economic woes, to
world stocks languishing at five-week lows.
Benchmark 10-year yields reached 4.312% on
Thursday, testing October’s 4.338% a break past which would be
its highest in 16 years.
“The reason behind the rise is the strong data the U.S.
domestic demand. The minutes (from the Fed’s July meeting,
released Wednesday), feel really dated, they are talking about a
gradual slowdown in the U.S. economy, but when you look at the
data we are not even in a slowdown,” said Samy Chaar, chief
economist at Lombard Odier.
Those minutes showed policy makers were divided over the
need for more interest rate increases, with some citing the risk
to the economy of pushing hikes too far.
U.S. retail sales data came out strong earlier this week,
and traders are also watching the Atlanta Federal Reserve’s
GDPNow forecast model, which, showed the U.S. economy is likely
to be growing at a 5.8% annualised rate in the third quarter.
Expectations for U.S. peak rates have not changed
significantly, however, instead the changes in yields have been
driven by changes in medium term rate expectations.
“What’s interesting is usually when you have volatility
around rates that’s the market trying to price in a higher fed
funds rate, what’s happening here is the market is pricing out
cuts, or at least delaying them till later,” said Chaar.
“The impact of higher yields is standard: a dollar that is
well supported and equities under pressure,” he added.
MSCI’s world index was down 0.18% on
Wednesday at its lowest level since Jul 6.
Europe’s broad STOXX 600 fell 0.3%, with the Dutch
benchmark standing out, down 1.12% after a 22% fall in
payments firm Adyen whose first half earnings missed
estimates.
The world share sell off could pause in the U.S., however,
with Nasdaq and S&P500 share futures up around 0.2%.
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CHINA WOES
China’s economy was the other topic on investors’ minds as a
series of economic data and ructions in the property sector have
laid bare the stuttering post-pandemic recovery.
The latest development was embattled asset manager Zhongzhi
Enterprise Group saying it will conduct a debt restructuring, a
further sign of turmoil in China’s $3 trillion shadow banking
sector.
MSCI’s broadest index of Asia-Pacific shares outside Japan
slid its lowest since late November in early
trading Thursday. The index down is about 8% for August and set
for its worst monthly performance since September 2022.
Hong Kong and onshore Chinese share benchmarks
steadied somewhat, albeit at multi-month lows, as
investors pin their hope on possible government stimulus to
boost the sputtering economy.
“I still think that there will be more action coming from
policymakers,” Herald van der Linde, chief Asia equity
strategist at HSBC, told the Reuters Global Markets Forum. “It
just takes a bit of time.”
Van der Linde said the appetite to invest in China is very
low. “And that appetite has to do with confidence, and that
won’t change too quickly. It would be good if we would get some
stimulus for consumers.”
In currency markets, the dollar index, which measures
the U.S. currency against six rivals, scaled a two-month peak of
103.59 underpinned by higher U.S. yields.
The Japanese yen touched a nine-month low of
146.57 per dollar earlier in the session, with traders keeping a
vigil on possible intervention chatter from Japanese officials.
Finance Minister Shunichi Suzuki said on Tuesday authorities
were not targeting absolute currency levels for intervention.
In commodities, oil prices steadied after three sessions of
declines. U.S. crude rose 0.21% to $79.55 per barrel and
Brent was at $83.82, up 0.44% on the day.
The spike in rates has weighed on non-yielding gold, which
touched a five-month low on Thursday. The metal was last
$1,89 an ounce, having dropped to as low as $1,888.30.
(Reporting by Ankur Banerjee in Singapore and Alun John in
London, additional reporting by Anosha Sircar in Bengaluru;
Editing by Muralikumar Anantharaman, Sonali Paul and Angus
MacSwan)
