Almost all Asia Pacific indices fell on Wednesday (3 Oct) morning, after the US 10-year treasury note’s yield rate touched a 16-year high of 4.8%.
The increasingly higher rate to 5.185% from 5.120% of US 1-year/52-week treasury bill auctions also confirmed the trend on last night, as both short and long term yield continued to climb even in the inverse yield curve relationship.
All said exacerbate the currencies weakening relatively to USD, as the bond-related risk mitigation instruments such as yield rate futures is not well-known or easily assessed by the masses. The exposures without said protection is resulting in continuously bearish markets trend on today as well.
South Korean KOSPI took a major loss over 2.2% to 2,410. Japan’s NIKKEI also continued to lose by 1.8% under 30,700. Singapore’s STI got hit by 1.3%, dropping the index to 3,150. Only two Chinese indices were spared by the bear as Shanghai’s SSEC and Shenzhen’s SZI remain unchanged, becuase today is still in the Chinese golden week of national holidays.
Meanwhile, the strengthening of the USD also dropped US Futures indices down. S&P 500 Futures continued the drop to 4,250, along with NASDAQ that plunged under 14,700. Both increased market’s fear as VIX headed back to 20 again, which is the same level in June of this year.
However, energy commodities did not fall together with stock indices. WTI crude oil was able to return to $89 last night, while Brent also headed back for $91. Meanwhile, natural gas reversed back to over $2.94 per MMBTU again.
Despite the yield rising, the US Dollar Index (DXY) managed to lose the 107 level, while other pairs’ currencies’ bearish trend still continued. As for the long-term bond, the US 30-year bond price index (ZB) fell below 110, the lowest since 2007 as well.
This also confirmed the rise of US yield as bond prices have an inverse relationship with bond yield. The bearish gold trend seems to subdued as the price hovered over $1,830 per Troy ounce.
In addition, Bitcoin (BTC)’s price fell under $27,400 after the cryptocurrency rose over $28,000 on Monday, the highest since August.
