MARKET UPDATE

Asia stocks slump as bond sell-off spooks markets.

Asian stocks sank to 11-month lows on Wednesday as an ongoing rout in global bond markets saw U.S. yields reach 16-year highs, challenging equity valuations and souring appetite for risk assets in general.

The spike in Treasury yields lifted the dollar to new heights with only the yen showing some fight amid speculation the Japanese authorities might be intervening behind the scenes.

The yen breached the 150-per-dollar level in the London afternoon on Tuesday before suddenly shooting to 147.3.

There was no confirmation from Tokyo, where Japan’s finance minister and top currency diplomat have made no direct comment on the move. The yen last stood at 149.18 per dollar. [FRX/]

Stronger-than-expected U.S. job openings data, meanwhile, sent the 10-year yield up nearly a dozen basis points (bps) on Tuesday, and it rose a further four bps in Asia to briefly top 4.85% for the first time since 2007. [US/]

Even Japan’s 10-year yield, which is capped by the Bank of Japan, rose 4.5 bps to a decade high despite the BOJ offering to buy $4.5 billion worth of bonds on Wednesday.

 

Taiwan central bank flags forex intervention.

Taiwan’s central bank will intervene in the foreign exchange market if there are “extreme” fluctuations to maintain financial stability, its governor Yang Chin-long said on Wednesday.

The Taiwan dollar has lost more than 5% of its value against the surging greenback so far this year and is at a more than seven-year low, as the export-dependent economy faces headwinds from slowing global demand for technology, Taiwan being a major producer of semiconductors.

Taking lawmakers’ questions in parliament, Yang said the central bank will intervene in the forex market as needed if there are “extreme” fluctuations, as they seek to slow the Taiwan dollar’s depreciation.

 

Oil dips on worries over high interest rate.

Oil fell on Wednesday ahead of a panel meeting of OPEC+ ministers, as the market weighed expectations of supply tightness against fears that high interest rates could reduce fuel demand.

Brent crude oil futures dipped 18 cents, or 0.2%, to $90.74 a barrel by 0611 GMT, while U.S. West Texas Intermediate crude (WTI) fell 20 cents to $89.03 per barrel.

Data on Tuesday night showed that U.S. job openings increased by the largest amount in more than two years, prompting a further sharp rise in Treasury yields.

Oil benchmarks have also been pressured by concerns that the strengthening dollar would dent demand, as it makes oil more expensive for holders of other currencies.

“A resilient labour market is deemed to be providing more room for the Federal Reserve (Fed) to keep rates high for longer,” said Yeap Jun Rong, market analyst at IG.

The Organization of the Petroleum Exporting Countries and allies, or OPEC+, is expected to keep output policy unchanged when it meets on Wednesday, after members Saudi Arabia and Russia extended output cuts to the end of the year.

Saudi Arabia is expected to raise its November official selling price of Arab Light crude to Asia for a fifth straight month, according to a Reuters survey, as market participants expect supplies of medium sour crude to remain tight.

“The recent oil price reversal could be a reason for the cartel to keep their supply cuts unchanged in today’s review meeting,” ANZ Bank analysts Brian Martin and Daniel Hynes said in a note.

 

 

 

 

 

 

 

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