An accelerating selloff in US government bonds is starting to spread havoc across Asia’s financial markets, pushing up borrowing costs, weighing on currencies and driving stocks toward a technical correction. MSCI’s Asia stock benchmark fell for a third day, taking its decline since a July high to just over 10%.
Treasuries extended losses in Asian trading, with yields on 10- and 30-year notes approaching 5%. US equity contracts slipped after the S&P 500 dropped to a four-month low Tuesday. The selloff in global debt pushed yields on Japan’s five-year bonds to a decade high.
The yen whiplashed in US trading hours after earlier weakening to levels that some traders suspected would trigger intervention support. Taiwan’s central bank will step in to moderate currency moves if needed, the governor told lawmakers, while Bank Indonesia said it’s buying bonds in the market to help steady the rupiah.
So crucial are US interest rates to global markets that investors are having to recalibrate wagers on everything from stocks to currencies as they come to the view that Federal Reserve monetary policy.
