GLOBAL MARKETS-Bond scares spook world shares, traders look to Powell

* Bond worries resurface forward of Powell’s feedback later in day

* Uncertainty on liquidity regulation on U.S. banks weigh on bonds

* Asian shares fall 1.8%, futures hit 2-month low

* Greenback hits 7-month excessive towards yen, 4-month excessive vs Swissie

* European shares seen falling 0.5-0.8%

By Hideyuki Sano

TOKYO, March 4 (Reuters) – Resurgent worries about rising U.S. bond yields hit world shares on Thursday as traders waited to see if Federal Reserve Chair Jerome Powell will handle issues concerning the threat of a fast rise in long-term borrowing prices.

The spectre of upper U.S. bond yields additionally undermined low-yielding, safe-haven property, such because the yen, the Swiss franc and .

Benchmark 10-year U.S. Treasuries rose to 1.477% , heading again in direction of a one-year excessive of 1.614% set final week on bets on a robust financial restoration aided by authorities stimulus and progress in vaccination programmes.

“It’s not clear how the Fed desires to take care of bond yields,” mentioned Hirokazu Kabeya, chief world strategist at Daiwa Securities.

“The tempo of rises in yields has been far quicker than most individuals have anticipated and there is hypothesis the authorities could also be beginning to consider tightening their coverage.”

Euro Stoxx 50 futures fell 0.9% whereas futures edged down 0.5% decrease.

The MSCI’s ex-Japan Asian-Pacific shares misplaced 1.8% in early commerce whereas Japan’s Nikkei fell 2.2%.

E-mini EScv1 slipped 0.4% whereas the futures for the Nasdaq, the unequivocal chief of the post-pandemic rally, fell 0.7% NQcv1 , hitting a two-month low.

Tech shares are susceptible as a result of their lofty valuation has been supported by expectations of a protracted interval of low rates of interest.

However the market is laser-focused on Powell, who is because of converse at a Wall Road Journal convention at 12:05 p.m. EST (1705 GMT), in what can be his final outing earlier than the Fed’s policy-making committee convenes March 16-17. Fed officers have downplayed the rise in Treasury yields in latest days, though Fed Governor Lael Brainard on Tuesday acknowledged issues over the likelihood a fast rise in yields may dampen financial exercise.

As well as, nervousness is constructing over a pending regulatory change in a rule known as the supplementary leverage ratio, or SLR, which may make it extra expensive for banks to carry bonds. market is more likely to be unstable till this regulation difficulty can be sorted out,” mentioned Masahiko Bathroom, portfolio supervisor at AllianceBernstein. “There aren’t individuals who wish to catch a falling knife when market volatility is so excessive.”

As well as, the market may even must grapple with an enormous improve in debt gross sales after rounds of stimulus to take care of a recession triggered by the pandemic.

The difficulty isn’t restricted to the US, with the 10-year UK Gilts yield leaping again to 0.779% , close to its 11-month excessive of 0.836% hit final week, after the federal government unveiled a lot larger borrowing. traders continued to snap up {dollars} as they guess on the U.S. financial system outshining friends within the developed world in coming months. FRX/

The greenback rose to a seven-month excessive of 107.16 yen .

“U.S. greenback/yen has been on a one-way trajectory because the begin of 2021,” mentioned Joseph Capurso, head of worldwide economics on the Commonwealth Financial institution of Australia.

“The brightening outlook for the world financial system is a optimistic for each U.S. greenback/yen and Australian greenback/yen.”

Different safe-haven currencies had been tender, with the Swiss franc flirting with a four-month low towards the greenback and a 20-month trough versus the euro EURCHF= .

Gold hit a nine-month low of

$1,702.Eight per ounce on Wednesday and final stood at $1,719.

Different main currencies had been little moved, with the euro flat at $1.2054 .

Investor give attention to a U.S. financial rebound was unshaken by information launched in a single day that confirmed the U.S. labour market struggling in February, when non-public payrolls rose lower than anticipated. costs rose for a second straight session early on Thursday, as the likelihood that OPEC+ producers would possibly resolve towards rising output at a key assembly later within the day underpinned alongside a drop in U.S. gas inventories. O/R

U.S. crude rose 0.6% to $61.64 per barrel. International currencies vs. greenback Rising markets MSCI All Nation World Index Market Cap


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