US Treasury Yields Rise, Asian Stocks Fall

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After rebounds following sharp falls after a Trump presidential victory, Asian markets, especially emerging ones, crashed Friday trade.

Malaysia’s FTSE Bursa Malaysia KLCI was off 1 percent, the Philippines’ PSEi dropped 2.9 percent, and Indonesia’s Jakarta Composite Index tumbled 3 percent.

The Shanghai Composite Index was, technically, on a bull market close that is 20 percent higher than the low it suffered early this year. The market’s strength was consolidated in the afternoon by broad-based gains particularly brokerage stocks.

Smaller-cap shares in Shenzhen lagged while stocks related to infrastructure closed high.

On the other hand, Hong Kong’s Hang Seng Index lost 1.4 percent, South Korea’s Kospi was down 0.9 percent and Taiwan’s Taiex closed 2.1 percent lower.

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“Global investors are favoring conditions in the U.S. market,” CMC Markets senior sales Alex Wijaya said, regarding surging U.S. Treasury yields. “We are seeing a general flowing to the U.S.”

The benchmark US Treasury note yield jumped from 2.070 percent on Wednesday to 2.118 overnight. The surged was backed by what was considered as the largest one-day rise in the note in more than three years on Wednesday.

“We think there is some heightened concern in Asia [about outflows] as well as inflation,” remarked Cynthia Wong, emerging markets trading head for Asia-Pacific fixed income and currencies at Société Générale.

According to Tareck Horchani, deputy head of Asian-Pacific sales trading at Saxo Capital Markets, in the emerging markets, currencies, equities and bonds tend to move together.

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