(Bloomberg) — The Japanese yen and Chinese yuan staged rallies following remarks by their central banks that propped up Asia’s worst-performing currencies. Equities in China snapped a four-day loss amid signs that the economy is stabilizing.
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The yen extended gains to more than 1% against the greenback after BOJ Governor Kazuo Ueda told the Yomiuri newspaper there may be sufficient information by year-end to judge if wages will continue to rise, which is a key factor in deciding whether to pare back its super-easy policy. The yield on the government’s 10-year bond jumped to 0.7%, the highest since 2014. The BOJ said it will conduct funds-supplying operations on Sept. 14 to curb the gains in yields.
China’s yuan rebounded from a 16-year low after the People’s Bank of China set Monday daily fixing at stronger-than-expected by a record margin and warned of action to correct one-sided moves in the market whenever it’s needed.
Both currencies lost more than 0.3% Friday, making them the region’s worst performers.
“It seems two tails together wagging the US dollar dog today, not just yuan but buy yen too,” said Ray Attrill, head of currency strategy at National Australia Bank in Sydney. “The lower US dollar-Japanese yen following BOJ’s Ueda weekend comments might have facilitated the lower US dollar-renminbi,” he said, adding that the People’s Bank of China’s most aggressive yuan fix played a role as well.
Treasuries fell slightly across tenors Monday as traders await US inflation due later this week, coming on the heels of data that have continued to defy gloomy forecasts. Yield on the policy-sensitive two-year paper hovered around 5%, while that on the 10-year note climbed nearly three basis points to 4.29%.
Treasury Secretary Janet Yellen said she’s increasingly confident that the US will be able to contain inflation without major damage to the job market, hailing data showing a steady slowdown in inflation and a fresh influx of job seekers.
The strong growth outlook in the US and hawkish risks around its Fed-on-hold call led strategists at JPMorgan Chase & Co. to raise their year-end forecast for Treasury yields, with the target on the 10-year increased to 4.20% from 3.85%.
Asian equities traded mixed with shares in Australia and South Korea gaining, while those in Hong Kong fell as trading resumed after a closure on Friday. Equities in mainland China rose, with easing deflationary pressure and a report on more cities relaxing mortgage rules helping stabilize sentiment. Japan’s Topix Bank Index rose as much as 4.7% on the back of Ueda’s comment and rising local bond yields.
Europe and US stock futures rose after the S&P 500 edged down at the end of last week.
Offering Spree
Borrowers in Asia extended a recent global corporate bond offering spree, with at least six borrowers from the Asia Pacific region on Monday signaled plans to sell dollar bonds in one of the busiest-ever starts to the month globally.
The dollar fell against all of its Group-of-10 counterparts after its recent rally drove the currency to a record streak of weekly gains. The greenback has been bolstered recently by bets the Fed will keep interest rates higher for longer.
Elsewhere, Arm Holdings Ltd. is considering raising the price range of its initial public offering after meeting investors for what would be the world’s largest listing this year, according to people familiar with the matter.
Oil declined after a two-week rally and gold rose by the most in nearly two weeks.
Key events this week
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UK jobless claims, unemployment, Tuesday
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Eurozone industrial production, Wednesday
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UK industrial production, Wednesday
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US CPI, Wednesday
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Eurozone ECB rate decision, Thursday
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Japan industrial production, Thursday
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US retail sales, PPI, business inventories, initial jobless claims, Thursday
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China property prices, retail sales, industrial production, Friday
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US industrial production, University of Michigan consumer sentiment, Empire Manufacturing index, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures rose 0.3% as of 7:01 a.m. London time. The S&P 500 rose 0.2% on Friday
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Nasdaq 100 futures rose 0.4%. The Nasdaq 100 rose 0.1%
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Japan’s Topix was little changed
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Australia’s S&P/ASX 200 rose 0.4%
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Hong Kong’s Hang Seng fell 1%
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The Shanghai Composite rose 1%
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Euro Stoxx 50 futures rose 0.3%
Currencies
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The Bloomberg Dollar Spot Index fell 0.5%
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The euro rose 0.3% to $1.0730
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The Japanese yen rose 1.1% to 146.23 per dollar
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The offshore yuan rose 0.9% to 7.2980 per dollar
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The Australian dollar rose 0.9% to $0.6435
Cryptocurrencies
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Bitcoin rose 0.2% to $25,881.26
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Ether fell 0.1% to $1,616.95
Bonds
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The yield on 10-year Treasuries advanced three basis points to 4.29%
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Japan’s 10-year yield advanced 5.5 basis points to 0.705%
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Australia’s 10-year yield advanced eight basis points to 4.16%
Commodities
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West Texas Intermediate crude fell 0.5% to $87.11 a barrel
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Spot gold rose 0.4% to $1,927.47 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Brett Miller and Tania Chen.
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