Asia-Pacific markets, U.S. bond yields, Australia, Japan, Korea

Japanese financial institutions have indicated interest in buying Japanese government bonds looking ahead to the Bank of Japan potentially turning to policy normalization, Nikkei reported.

Sumitomo Mitsui told Nikkei that its basic thresholds are 1% in the 10-year yield and 2% in 20-year yield, expecting bullish sentiment to follow the central bank further widening its yield tolerance range.

Mizuho also told Nikkei that domestic investors would purchase Japanese government bonds if the central bank was to abolish the yield curve control scheme altogether, adding that it does not see market turmoil to follow the move.

– Jihye Lee

Shares of some Tesla’s suppliers are trading mixed after the carmaker’s shares plunged more than 5% in after hours trade.

LG Chem, which supplies battery cells to Tesla, saw its shares fall by 0.59%. But other suppliers, like Panasonic saw its shares rise by 0.43%, and Samsung SDI saw a larger climb to 1.95%.

At its investor day presentation on Wednesday, the company said its goal was to produce 20 million electric vehicles per year by 2030.

Most notably, Tesla had pledged to halve production costs for its vehicles, with chief engineer Lars Moravy saying that the company expects to build its next-generation vehicles for half the cost of the current Model 3 or Model Y.

U.S.-listed shares of Nio slid about 4% after the Chinese electric vehicle maker reported a wider-than-expected operating loss of 6,736.1 million Chinese Yuan ($976.7 million U.S.) for the fourth quarter. That’s a much wider loss from the year prior.

“While vehicle revenue of Rmb14.8bn (+24% QoQ) came in largely in-line, vehicle gross margin of 6.8% (down 9.5ppt QoQ) surprised on the downside. The company attributed the drastic margin contraction to: 1) inventory provisions; 2) accelerated depreciation on production facilities; and 3) losses on purchase commitments to suppliers for NT1.0 models,” said Morgan Stanley analyst Tim Hsiao, who has an overweight rating on the stock.

The automaker also provided weak guidance, Citi analyst Jeff Chung pointed out. He has a buy rating on the stock, but emphasizes it is a high-risk investment “given the company’s start-up positioning, early stage of product deliveries, other operational risks, the risk of original financial investors selling stakes in the future,as well as the shares’ relatively brief trading history.”

UBS, on the other hand, is neutral on the stock, calling it “our least preferred EV name under our coverage.”

South Korea recorded a 12.7% contraction in its industrial output for January on an annualized basis, marking its fourth straight month of decline.

This was a steeper fall compared to December’s revised figure of a 10.5% contraction, and also lower than economists expectations of 8.9%, according to Refinitiv data.

The Korean won strengthened marginally against the U.S. dollar on Thursday, trading at 1304.42.

—Lim Hui Jie

Minneapolis Federal Reserve President Neel Kashkari said Wednesday that he’s open to the possibility of a larger interest rate increase at this month’s policy meeting, but hasn’t made up his mind yet.

“I’m open-minded at this point about whether it’s 25 or 50 basis points,” the central bank official said during an event in his home district.

A voting member on the rate-setting Federal Open Market Committee, Kashkari said the “dot plot” of individual members’ future expectations will be more significant than what’s decided at the March 21-22 meeting.

He noted that his “dot” was higher than most of the other FOMC members at the last meeting, when the committee stepped back the level of previous hikes to a quarter-point move. Kashkari indicated the he again is likely to tilt to the hawkish side in view of recent data that shows inflation remains high despite all the rate increases over the past year.

“At this point I have not decided what my dot is going to look like, but I lean towards continuing to raise further. I would continue to push up my policy path,” he said.

—Jeff Cox

Manufacturing remained in contraction during February as production and new orders slowed, the Institute for Supply Management reported Wednesday.

The closely watched ISM Manufacturing Index registered a 47.7% reading, representing the percentage of companies reporting expansion. A reading below 50% represents contraction.

Economists had been looking for a headline reading of 47.8%, according to Dow Jones.

In the details, new orders rose but remained in a pullback at 47%, while the production index edged down to 47.3%. Importantly, inflation re-emerged in the sector, with the prices index jumping 6.8 percentage points to 51.3%. Employment nudged down into contraction territory with a 49.1% reading.

—Jeff Cox

The 10-year Treasury yield took another run at 4%, as stocks chopped lower in afternoon trading.

The 10-year was at 4.004% in mid-afternoon. The 10-year yield breached 4% for the first time since Nov. 10 in late morning trading, but backed off below that level temporarily. Yields move opposite price.

Traders have been watching the negative correlation between stocks and the benchmark 10-year’s move to the key 4% psychological level. Chart strategists say the level is not important resistance, but it is important in terms of the impact on investor sentiment.

Tech and growth stocks are particularly sensitive to moves in the 10-year yield. The Technology Select Sector SPDR Fund, which repesents the tech names in the S&P 500, was off 0.8%.

Bond strategists expect the 10-year yield to continue to rise, ahead of the Fed’s March 22 rate decision. Any strong inflation or even jobs data could be a catalyst for a move higher.

Michael Schumacher of Wells Fargo said the 10-year could easily reach 4.20% in the near term.

—Patti Domm

The 60/40 model, in which investors put 60% of their money in stocks and 40% in bonds, was once the linchpin of a typical investment portfolio. Morgan Stanley’s Jim Caron tells CNBC if he’s still convinced now that rates are higher for longer.

Pro subscribers can read more here.

— Zavier Ong

The surge in Treasury yields is taking markets by storm, and investors are now looking to bonds for yield — particularly short-term ones.

Want to cash in on funds with the highest yields? CNBC Pro screened for top-rated, ultra-short term bond funds and ETFs using Morningstar data.

CNBC Pro subscribers can read more here.

— Weizhen Tan