Asian stocks trade mixed amid sharp drop in bond yields

  • Asian stocks are lacking a clear directional bias despite upbeat US data.
  • Japanese 10-year bond yield fell to three-year lows earlier today.

Asian stocks are trading mixed Friday morning amid a relentless slide in the government bond yields across the globe.

As of writing, Japan's Nikkei is trading 16 points or 0.10% lower on the day and South Korea's Kospi is shedding 15 points or 0.77%.

Meanwhile, the Shanghai Composite is adding 7 points or 0.26% and shares in Hong Kong are up 35 points or 0.10%. Stocks in Australia are sidelined while those in New Zealand are down more than 1%.

The yield on the 10-year Japanese government bond yield fell to -0.25% earlier today, the lowest level since July 2016. That forced the BOJ to reduce purchases of bonds maturing in five to ten years by JPY 30 billion.

The US 30-year treasury yield fell below 2% for the first time on record in the overnight trade, on fears a global recession may be coming sooner than expected.

The US treasury yield curve inverted earlier this week with the 10-year yield falling below the two-year yield. Many observers, however, believe the US economic data does not indicate that a recession is coming.

For instance, the data released on Thursday showed retail sales rose a healthy 0.7% last month, after a 0.3% gain in June, assuring markets that Americans are spending more than enough to keep the economy from falling into a recession.

The data helped the US stocks eke out moderate gains. The Dow Jones Industrial Average added 99 points and the S&P 500 index gained 7 points.

The stocks may remain better bid today as indicated by the 0.45% rise in the futures on the S&P 500.


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