The recent bout of global risk aversion generated by Brexit fears have boosted safe-havens like government debt, sending the German and Japanese benchmark 10-year yields to record lows this week. The bond yields, which drop as bond prices rise, are also under pressure from central banks’ ultra-loose monetary policy.
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Australian stocks added 0.7 percent, but Japan’s Nikkei fell 0.8 percent, hurt by the yen’s latest uptick.
Bank of America Merrill Lynch global and United States economist Michael S. Hanson expects a September follow-up to the Fed’s so-called “lift-off” in December, its first interest rate increase in nearly a decade.
Nippon Telegraph and Telephone (NTT) was up 0.57 percent at 4,555.0 yen after saying it had bought 59 million of its own shares worth 267 billion yen as part of a buyback plan.
With policy meetings of the U.S. and Japanese central banks this week, investors are staying cautious, analysts said, while Chinese traders are waiting to see if index compiler MSCI decides to include Shanghai in its global benchmarks list. This has already been priced in the USA dollar, and markets are more interested in knowing how the Fed sees the health of the labour market after May’s disappointing NFP figures, and whether clear signals will be given as to the time frame of the tightening of United States monetary policy, which will shape expectations for the next couple of months.
General anxiety about the strength of the US economic recovery and the chance of a British exit, or “Brexit”, have driven investors into the yen, seen as a safe-haven asset. Polls show the vote could go either way and investors are starting to worry about the consequences. Against the yen, it skidded 0.6 percent to 119.28, moving back toward a more than three-year low of 119.005 plumbed in the previous session. The repercussions, however, are not clear and investors are reacting to the general uncertainty over the situation.
After falling by 3.5% on Monday, Japan’s benchmark Nikkei 225 closed down a further 1% at 15,859.
CHINA WEAKNESS: Factory output and investment in May were weaker than expected, hurt by slow foreign and domestic demand. Industrial production held steady at 6 percent.
The 10-year Treasury note yield slipped to 1.555 per cent, a four-month low.
The euro inched up 0.1 per cent to $1.1272 after gaining 0.5 per cent overnight. “Momentum appears to be stalling after a solid start to 2016”, said Mizuho Bank in a report. The Shanghai Composite Index slipped 0.5 percent.
Meanwhile, the WTI crude was quoted 1.06% down at US$ 48.36/bbl, while the Brent crude in London was quoted at US$ 49.87/bbl, down 0.95%. Ahead of today’s Bank of Japan conference, traders stated strong resistance around 105.50 has kept the yen from rising to 100 per dollar, the level lots of assume would compel Japan to step in versus its currency.
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The dollar has retreated to around $1.1295 against the Euro Monday afternoon, from an early high of $1.1231.
