Wednesday, 06 May, 2015

Asian Bonds Extend Global Rout as Stocks Drop With Copper, Kiwi

(Bloomberg) — Asian bonds fell, extending a selloff that’s erased $340 billion in value globally, and shares retreated with copper. Oil traded above $60 a barrel, while New Zealand’s dollar slid as jobs data spurred interest-rate cut speculation. Yields on 10-year government notes from Australia to Singapore rose at least four basis points by 12:44 p.m. in Hong Kong, after rates on Treasuries increased to an almost two-month high and German bunds slid a seventh day. The MSCI Asia Pacific excluding Japan Index dipped 0.4 percent as benchmark gauges in Sydney and Seoul fell more than 1 percent. Standard & Poor’s 500 Index futures rose 0.3 percent. Copper slid 1 percent after entering a bull market Tuesday. The kiwi weakened 1.1 percent. Global bond markets have tumbled since the start of last week as investors question the sustainability of rallies that pushed rates to record lows, amid signs price growth is reviving. Oil is trading above $60 a barrel for the first time in 2015 on prospects the biggest supply glut in 85 years is easing. Chinese shares rallied from the biggest drop in three months after the official Xinhua News Agency said the nation’s bull market isn’t over. “Interest-rate expectations across most central banks are pretty fluid at the moment, which is creating more volatility in the bond markets in general,” said Thomas Averill, a managing director in Sydney at Rochford Capital Pty, a currency and rates risk-management company. “There seems to be inflation concerns emerging in Europe, particularly in Germany, and that’s hitting bunds. Rate hike expectations have been pushed too far out.” Bonds Shunned Yields on Australian government notes due in a decade rose for a seventh day, the longest streak in four years. The rate jumped as much as 16 basis points to 2.96 percent, close to the 200-day moving average, before trading at 2.94 percent, set for the highest close since Dec. 9. Similar-maturity New Zealand yields climbed for a 13th day, a record streak, adding five basis points to 3.59 percent. Ten-year Singaporean rates rose four basis points to 2.40 percent. South Korean rates gained six basis points to 2.53 percent. President Park Geun Hye said this week the economy is showing signs of improvement thanks to adjustments in fiscal and monetary policies. Ten-year Treasuries paid 2.19 percent and German bunds offered 0.51 percent, up from a low of just 0.049 percent on April 17. Euro-area producer prices data Monday indicated declines are slowing, suggesting the risk of deflation is receding, while wrangling over aid for Greece shows little progress. Stock Moves The S&P/ASX 200 Index slid 1.6 percent in Sydney, set for its lowest close since Feb. 12, while the Kospi index in Seoul — which was closed Tuesday for a holiday — lost 1.6 percent. Hong Kong’s Hang Seng Index climbed 0.9 percent after plunging 1.3 percent Tuesday. A gauge of Chinese companies in the city rose 1.8 percent and the Shanghai Composite Index added 1.4 percent after a 4.1 percent rout. The stock market’s decline on Tuesday wasn’t the end of the bull market and could instead help market enter a “slow bull” mode advocated by regulators, the official Xinhua News Agency said in a commentary on its website. Data Tuesday showed the U.S. services sector unexpectedly grew at a faster pace in April, stoking losses in the Treasury market. Yields on 10-year Treasury notes rose a third day, gaining four basis points to 2.19 percent, the highest level since March 9. Kiwi Slump The kiwi lost as much as 1.3 percent to 74.59 U.S. cents after data showed New Zealand’s jobless rate held at 5.8 percent last quarter. Economists had predicted a drop to 5.5 percent. The figures spurred ASB Bank Ltd. and Deutsche Bank AG to predict interest rate cuts this year. West Texas Intermediate crude increased 1.7 percent, climbing a second day. U.S. stockpiles fell by 1.5 million barrels last week, the American Petroleum Institute reported Tuesday, according to ForexLive. Analysts are predicting a 1.35 million increase in inventories in the week through May 1, with government data due Wednesday. Supply gains averaged 4.87 million barrels a day in the four weeks ended April 24, the lowest level since January. Copper fell to $6,420 a metric ton on the London Metal Exchange after capping its longest rally in almost a decade Tuesday. Prices closed 20 percent from their most recent closing low last session, the common definition of a bull market. Disclaimer The information contained in this communication from the sender is confidential. It is intended solely for use by the recipient and others authorized to receive it. If you are not the recipient, you are hereby notified that any disclosure, copying, distribution or taking action in relation of the contents of this information is strictly prohibited and may be unlawful. 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