Yen Drops, Global Bonds Gain as BOJ Holds Rate: Markets Wrap - Yahoo Finance

(Bloomberg) -- The yen slumped and global bond yields slid after the Bank of Japan signaled it’s in no hurry to remove negative interest rates.

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Japan’s currency fell as much as 1.5% to a one-week low against the dollar, while the Nikkei 225 equity index rallied after the BOJ held its policy rate at -0.10%. Treasury 10-year yields slipped about two basis points, while the German 10-year dropped five basis points, as yields across the euro area fell.

US equity futures inched higher after the Nasdaq 100 hit a record high Monday for the second consecutive session. Crypto stocks, including Coinbase Global and Marathon Digital, were among the gainers as Bitcoin advanced further to trade above $43,000. In Europe, the Stoxx 600 index rose 0.3%, with Switzerland’s UBS AG rising as much as 2.8% after Cevian Capital AB took a €1.2 billion ($1.3 billion) stake.

Japanese policymakers did not unveil any groundwork to move away from sub-zero rates, while BOJ governor Kazuo Ueda pushed back against expectations on policy tightening as soon as January.

“The BOJ stance encouraged speculators to sell the yen, and there’s relief that yields in Japan aren’t likely to to to jump higher,” said Lee Hardman, a strategist at MUFG Bank Ltd. “That takes some of downside risk away for other major global bond markets as well.”

Japan’s central bank has been an outlier, having failed to even start tightening policy, even as peers in the US and Europe appear set to wind down their rate-hike cycles. Its meeting follows an apparently dovish pivot from the Federal Reserve last week, which got markets wagering US and European rate cuts will start next year.

Expectation about policy easing by the FED are making investors the most optimistic since the beginning of 2022, according to a Bank of America Corp. survey.

Still, several policymakers in Europe and the US have tried to push back against such bets. Chicago Fed President Austan Goolsbee and the Cleveland Fed’s Loretta Mester suggested on Monday, the expectations were premature. Atlanta Fed President Raphael Bostic will speak later Tuesday.

While Treasury markets had paused Monday after the Fed officials’ comments, Hardman said “ultimately the market is looking through those comments because they only really have credibility if the data backs them up.”

Whether equities and bonds continue their rallies might be determined by near-term data readouts including durable goods orders, personal consumption expenditures — the Fed’s preferred measure of inflation — and the final third quarter gross domestic product estimate.

Elsewhere, oil held near its highest close in two weeks as more companies shun the Red Sea after a spike in vessel attacks along the key shipping conduit.

Shares in shipping companies such A.P Moller-Maersk A/S and Hapag-Lloyd AG eased after surging for four sessions in a row as US Defense Secretary Lloyd Austin announced the creation of a task force to protect commercial vessels traveling through the area.

Key events this week:

• Eurozone inflation, Tuesday

• Canada inflation, Tuesday

• Atlanta Fed President Raphael Bostic speaks, Tuesday

• New Zealand issues half-year economic and fiscal update, Wednesday

• China loan prime rates, Wednesday

• UK inflation, Wednesday

• US Conference Board consumer confidence, existing home sales, Wednesday

• Bank Indonesia rate decision, Thursday

• US GDP, initial jobless claims, Conf. Board leading index, Thursday

• Nike earnings, Thursday

• Japan inflation, Friday

• UK GDP, Friday

• US personal income and spending, new home sales, durable goods, University of Michigan consumer sentiment index, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 7:02 a.m. New York time

• Nasdaq 100 futures were little changed

• Futures on the Dow Jones Industrial Average were little changed

• The Stoxx Europe 600 rose 0.2%

• The MSCI World index was little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro rose 0.1% to $1.0940

• The British pound rose 0.5% to $1.2706

• The Japanese yen fell 1.4% to 144.74 per dollar

Cryptocurrencies

Bonds

• The yield on 10-year Treasuries declined two basis points to 3.91%

• Germany’s 10-year yield declined four basis points to 2.04%

• Britain’s 10-year yield was little changed at 3.69%

Commodities

This story was produced with the assistance of Bloomberg Automation.

--With assistance from Jason Scott and Tassia Sipahutar.

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Yen Drops, Global Bonds Gain as BOJ Holds Rate: Markets Wrap - Yahoo Finance
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