Asian stocks retreated as the Federal Reserve’s resolve to keep raising rates reduced the appetite for riskier assets. The yen stabilized after speculation that a shift is on the horizon for Japan’s monetary regime fueled early gains.
Shares dropped across the region, while US equity futures ticked higher after the S&P 500 and the tech-heavy Nasdaq 100 closed lower for a third day on Friday.
The yen was little changed around 136 per dollar and remained on course for a second daily gain, while the yield on Japan’s benchmark five-year note touched the highest level in more than seven years.
The moves were supported by a report that the Japanese prime minister may consider allowing more flexibility in the monetary framework. A top government spokesman denied the report.
If such flexibility does translate into an exit from Japan’s yield-curve control policy or if it suggests a higher target for the 10-year government bond yield, “the markets will absolutely interpret that as bullish yen.
In fact, they already are in advance of that,” Sue Trinh, head of macro strategy at Manulife Investment Management, said on Bloomberg Television.
