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New Straits Times
23-05-2025
- Business
- New Straits Times
Dollar under pressure and all eyes on Treasuries as US fiscal anxiety rises
LONDON/SYDNEY: The dollar headed for its first weekly fall in five weeks against major currencies on Friday and long-dated Treasury yields stayed elevated, as US debt concerns that have mounted for years started driving moves in currencies and global debt. Investor attention has switched from tariff anxiety to US fiscal concerns in a week where Moody's downgraded the US credit rating and the Republican-controlled House of Representatives on Thursday passed a sweeping tax and spending bill. Futures contracts tracking Wall Street's benchmark S&P 500 share index were steady in European morning trade as investors balanced the tax-cut boost to corporate earnings with longer-term concerns about the US economy. "It's good for corporates initially, and clearly you're seeing the flip side of that in Treasury markets," Netwealth CIO Iain Barnes said. But with long-dated debt yields' tendency to impact valuations of other assets, from global currencies to stocks, he said investors were nervous that any further volatility in 30-year Treasuries could start rippling across global markets. "Multi-asset investors' primary concern is thinking about how these different asset classes respond to each other," he said, adding that he was keeping his own portfolios broadly diversified and neutral on market risk for now, in line with much of the investment industry. With the U.S debt pile already at US$36 trillion, President Donald Trump's plans to slash taxes, cut federal budgets and boost military and border enforcement spending has sparked rollercoaster moves in the long-term debt yields that set the nation's borrowing costs. The 30-year Treasury yield was 4 basis points lower but held just above 5 per cent after hitting a 19-month high in the previous session. "There is certainly nothing in this market move or the passage of this version of the bill that tells me there is going to be meaningful reduction in US bond issuance or this broader concern about global bond supply," said Ken Crompton, senior interest rate strategist at the National Australia Bank. Yields on 30-year Japanese bonds, which hit record highs earlier in the week as selling driven by domestic fiscal and inflation concerns was exacerbated by moves in US debt, recovered slightly, declining by 5 bps to around 3.10 per cent . Data on Friday showed Japan's core consumer price inflation climbed 3.5 per cent in April in its steepest annual increase for more than two years, raising pressure on the Bank of Japan to keep hiking interest rates. In the euro area, German Bund yields dipped on but stayed on track for their fifth straight weekly rise, tracking US Treasuries. The benchmark European debt has sold off despite money markets showing that traders anticipate the European Central Bank cutting its main deposit rate to about 1.75 per cent by year-end . DOLLAR DECLINE In currency markets, the euro firmed 0.5 per cent to US$1.1335 . An index tracking the US currency against a basket of peers including the euro and Japan's yen, was 0.2 per cent lower and down 1.3 per cent on the week in its first weekly drop since late April. Despite the euro's gain, which tends to knock exporters' shares, Europe's Stoxx 600 share index gained 0.3 per cent in early dealings and Germany's Xetra Dax added 0.4 per cent, as traders stayed cautious towards US assets. Japan's Nikkei also gained 0.5 per cent on Friday, with MSCI's broadest index of Asia-Pacific shares outside Japan rising by the same amount. Bitcoin prices dipped from its record high but it was still set for a weekly gain of 6.4 per cent to US$110,796. Oil prices dropped for a fourth consecutive session and were set for their first weekly decline in three weeks, weighed down by renewed supply pressure from another possible OPEC+ output hike in July. Brent futures fell 0.85 per cent to US$63.89 a barrel and US West Texas Intermediate crude futures fell 0.9 per cent to US$60.65. In precious metals, gold prices rose just over 1 per cent to US$3,321 an ounce.
Mint
23-05-2025
- Business
- Mint
Dollar under pressure and all eyes on Treasuries as U.S. fiscal anxiety rises
By Naomi Rovnick, Stella Qiu LONDON/SYDNEY (Reuters) -The dollar headed for its first weekly fall in five weeks against major currencies on Friday and long-dated Treasury yields stayed elevated, as U.S. debt concerns that have mounted for years started driving moves in currencies and global debt. Investor attention has switched from tariff anxiety to U.S. fiscal concerns in a week where Moody's downgraded the U.S. credit rating and the Republican-controlled House of Representatives on Thursday passed a sweeping tax and spending bill. Futures contracts tracking Wall Street's benchmark S&P 500 share index were steady in European morning trade as investors balanced the tax-cut boost to corporate earnings with longer-term concerns about the U.S. economy. "It's good for corporates initially, and clearly you're seeing the flip side of that in Treasury markets," Netwealth CIO Iain Barnes said. But with long-dated debt yields' tendency to impact valuations of other assets, from global currencies to stocks, he said investors were nervous that any further volatility in 30-year Treasuries could start rippling across global markets. "Multi-asset investors' primary concern is thinking about how these different asset classes respond to each other," he said, adding that he was keeping his own portfolios broadly diversified and neutral on market risk for now, in line with much of the investment industry. With the U.S debt pile already at $36 trillion, President Donald Trump's plans to slash taxes, cut federal budgets and boost military and border enforcement spending has sparked rollercoaster moves in the long-term debt yields that set the nation's borrowing costs. The 30-year Treasury yield was 4 basis points lower but held just above 5% after hitting a 19-month high in the previous session. "There is certainly nothing in this market move or the passage of this version of the bill that tells me there is going to be meaningful reduction in U.S. bond issuance or this broader concern about global bond supply," said Ken Crompton, senior interest rate strategist at the National Australia Bank. Yields on 30-year Japanese bonds, which hit record highs earlier in the week as selling driven by domestic fiscal and inflation concerns was exacerbated by moves in U.S. debt, recovered slightly, declining by 5 bps to around 3.10%. Data on Friday showed Japan's core consumer price inflation climbed 3.5% in April in its steepest annual increase for more than two years, raising pressure on the Bank of Japan to keep hiking interest rates. In the euro area, German Bund yields dipped on but stayed on track for their fifth straight weekly rise, tracking U.S. Treasuries. The benchmark European debt has sold off despite money markets showing that traders anticipate the European Central Bank cutting its main deposit rate to about 1.75% by year-end. In currency markets, the euro firmed 0.5% to $1.1335. An index tracking the U.S. currency against a basket of peers including the euro and Japan's yen, was 0.2% lower and down 1.3% on the week in its first weekly drop since late April. Despite the euro's gain, which tends to knock exporters' shares, Europe's Stoxx 600 share index gained 0.3% in early dealings and Germany's Xetra Dax added 0.4%, as traders stayed cautious towards U.S. assets. Japan's Nikkei also gained 0.5% on Friday, with MSCI's broadest index of Asia-Pacific shares outside Japan rising by the same amount. Bitcoin prices dipped from its record high but it was still set for a weekly gain of 6.4% to $110,796. Oil prices dropped for a fourth consecutive session and were set for their first weekly decline in three weeks, weighed down by renewed supply pressure from another possible OPEC output hike in July. Brent futures fell 0.85% to $63.89 a barrel and U.S. West Texas Intermediate crude futures fell 0.9% to $60.65. In precious metals, gold prices rose just over 1% to $3,321 an ounce. To read Reuters Markets and Finance news, click on For the state of play of Asian stock markets please click on: (Reporting by Naomi Rovnick and Stella Qiu; Editing by Dhara Ranasinghe and x)
Business Recorder
09-05-2025
- Business
- Business Recorder
Bund yields rise to multi-week highs on trade hopes
Safe-haven German Bund prices fell on Friday, driving yields higher, as expectations that a trade deal between the United States and the UK could pave the way for similar tariff agreements boosted appetite for riskier assets. Markets expect trade tensions to hurt economic growth in the euro area, potentially forcing the European Central Bank to cut interest rates further. US President Donald Trump and British Prime Minister Keir Starmer announced on Thursday a limited bilateral agreement that leaves Trump's 10% tariffs on British exports in place and lowers prohibitive US duties on British car exports. Trump said he expected substantive negotiations with China this weekend and predicted that US tariffs on Beijing of 145% would come down. Germany's 10-year yield, the euro area benchmark, rose 4.5 basis points (bps) to 2.565%, its highest since April 14. German bond yields at three week highs as investors await debt sales Money markets priced in an ECB deposit facility rate of 1.67%. They had indicated a depo rate below 1.55% in mid-April as the ECB suggested it was ready to cut rates in response to the potential adverse economic impact of US tariffs. German 2-year yields, more sensitive to European Central Bank policy rates, were up 3 bps at 1.80%. Italy's 10-year yield rose 4 bps to 3.62%, leaving the spread over Germany's Bund yield - a market gauge of the risk premium investors demand to hold Italian debt - at 101 bps.
Reuters
06-05-2025
- Business
- Reuters
'Asian crisis in reverse' as currencies soar on the dollar
A man walks past an advertisement promoting China's renminbi (RMB) or yuan, U.S. dollar and Euro exchange services at foreign exchange store in Hong Kong, China, August 13, 2015. German Bund yields edged up on Thursday following efforts by China's central bank to slow a sharp descent of the yuan... Purchase Licensing Rights , opens new tab Item 1 of 2 A man walks past an advertisement promoting China's renminbi (RMB) or yuan, U.S. dollar and Euro exchange services at foreign exchange store in Hong Kong, China, August 13, 2015. German Bund yields edged up on Thursday following efforts by China's central bank to slow a sharp descent of the yuan that has prompted investors this week to seek safe-haven assets. REUTERS/Tyrone Siu/File Photo Summary Taiwan dollar rockets to record gains Sing dollar near decade high, ringgit, yuan, baht and won rise 'Asian demand for dollars is waning' - analyst SINGAPORE/SHANGHAI, May 6 (Reuters) - A wave of dollar selling in Asia is an ominous sign for the greenback as the world's export powerhouse starts to question a decades-long trend of investing its big trade surpluses in U.S. assets. Ripples from Friday and Monday's record rally in the Taiwan dollar are now spreading outward, driving surges for currencies in Singapore , South Korea , Malaysia , China and Hong Kong . The Reuters Tariff Watch newsletter is your daily guide to the latest global trade and tariff news. Sign up here. The moves sound a warning for the dollar because they suggest money is moving in to Asia at scale and that a key pillar of dollar support is wobbling. Advertisement · Scroll to continue While Tuesday brought a measure of stability, following a stunning 10% two-day leap for Taiwan's currency, Hong Kong's dollar was testing the strong end of its peg and the Singapore dollar has soared close to its highest in more than a decade. "To me, it has a very sort of Asian-crisis-in-reverse feel to it," said Louis-Vincent Gave, founding partner of Gavekal Research, in a podcast, due to the speed of the currency moves. In 1997 and 1998 capital flight sank currencies from Thailand to Indonesia and South Korea and left the region determined to accumulate dollars in the aftermath. "Since the Asian crisis, Asian savings have not only been massive, but they've had this tendency to be redeployed into U.S. Treasuries. And now, all of a sudden, that trade no longer looks like the one-way slam dunk that it had been for so long," said Gavekal's Gave. Advertisement · Scroll to continue Traders in Taiwan had reported difficulty executing trades, such was the one-sided wave of dollar selling, and speculated it had been at least tacitly endorsed by the central bank. Dealers said volumes were heavy in other Asian markets. At its heart, the break has been triggered by U.S. President Donald Trump's aggressive tariffs, analysts said, rattling investors' confidence in the dollar and upending the flow of trade dollars into U.S. assets in two places. First, exporters especially in China can expect fewer receipts as tariffs cut access to U.S. customers. Second, fear of a U.S. downturn casts a shadow over U.S. asset returns. "Trump's policies have weakened the market's confidence in the performance of U.S. dollar assets," said Gary Ng, senior economist at Natixis. Some are speculating on what markets have termed a "Mar-a-Lago agreement," he said, or a deal - named after Trump's gilded Florida resort - to weaken the dollar. Ad Break Coming Up NEXT Stay Next About Connatix V580873 1/1 Skip Ad Continue watching after the ad Visit Advertiser website GO TO PAGE Taiwan's Office of Trade Negotiations denied tariff talks in Washington last week had involved the topic of foreign exchange. TALK BECOMES REALITY Asia's biggest piles of dollars sit in China, Taiwan, South Korea and Singapore, which combined number in the trillions. In China alone, foreign currency deposits at banks - mostly dollars and mostly held by exporters - were $959.8 billion at the end March, the highest in nearly three years. On top of that are layered investments funded in these currencies, which have low borrowing costs by global standards and investments in U.S. stocks and bonds by pension and insurance funds, which have tended to keep foreign exchange hedges small due to the costs involved. There are signs the dollar view is shifting from all corners. Goldman Sachs said in a note on Tuesday that investor clients had recently flipped from short yuan positions, to long positions, or in other words, they are shorting the U.S. dollar expecting further weakness. A popular trade that involved buying cheap U.S. dollars in the Hong Kong dollar forwards market , known in markets as the gift that never stopped giving, also went into reverse since it rested on the Hong Kong dollar staying still. "Macro funds and leveraged players have hundreds of billions of dollars in the HKD forwards free-money trade, and now they are unwinding," said Mukesh Dave, chief investment officer at Aravali Asset Management, a global arbitrage fund based in Singapore. Hong Kong's de-facto central bank said on Monday it has been reducing duration in its U.S. Treasury holdings and diversifying currency exposure into non-U.S. assets. Rallies in Asia's bond markets suggests exporters' and long-only money may be coming home, too. "Repatriation talk is becoming reality," said Parisha Saimbi, Asia-Pacific rates and FX strategist at BNP Paribas in Singapore, as investors and exporters are either unwinding or rushing to hedge. "Whichever format it comes in, it suggests that the support for the dollar is shifting and it's turning lower ... I think it speaks to this idea that there is a de-dollarization in action." UBS estimates that if Taiwan's insurance companies increased hedging ratios to their 2017-2021 averages, it could be worth some $70 billion in U.S. dollar selling. To be sure, Taiwan's central bank has vowed to stabilise the local currency and even the island's president took the unusual step of recording a video message to insist the exchange rate was not part of U.S. trade talks. Still, the market seems to be voting with its wallet. "USD/TWD is a canary in the coal mine," said Brent Donnelly, veteran trader and president at analytics firm Spectra Markets. "Asian demand for U.S. dollars and Asian central bank desire to support the U.S. dollar is waning." Reporting by Tom Westbrook, Vidya Ranganathan, Ankur Banerjee and Rae Wee in Singapore, Jiaxing Li in Hong Kong and Winni Zhou and Samuel Shen in Shanghai; Writing by Tom Westbrook; Editing by Kim Coghill Our Standards: The Thomson Reuters Trust Principles. , opens new tab Share X Facebook Linkedin Email Link Purchase Licensing Rights
Wall Street Journal
09-04-2025
- Business
- Wall Street Journal
Eurozone Bond Yields Fall, Diverge From U.S. Treasury Yields
1508 GMT – Eurozone bond yields trade lower in late European trade, diverging from rising U.S. Treasury yields, as investors worry about the economic toll of President Trump's tariffs and anticipate a greater number of European Central Bank interest-rate cuts. 'Overall, at the next four meetings, we expect 100 basis points of rate reductions, taking the ECB's deposit rate to a low of 1.5%,' analysts at ABN Amro say in a note. In the 10-year segment, German Bund yields lead the fall, last 6 basis points lower at 2.570%. The 10-year Italian BTP yield is an outlier, rising 1 basis points to 3.860%, according to Tradeweb. Investors meanwhile continue to sell U.S. Treasurys, with the 10-year yield up 11 basis points at 4.370%. ( 1040 ET – The rise in Treasury yields means bonds may be cheap enough to attract demand for 10-year notes being auctioned at 1 p.m., PGIM's Robert Tipp says. 'After a 50-basis-point-plus selloff in the 10-year in the last three days…I think pretty good value has been created' and the auction could go 'pretty smoothly,' he says. Fixed-income investors are worried that demand for U.S. government debt could diminish amid uncertainties stemming from trade wars. Tipp says the worst might be almost over. 'Tariff concerns were at a fever pitch and it is possible that some of this uncertainty could decline as we go forward.' ( @ptrevisani)
