Asian Bonds Follow Treasuries Lower, Dollar Slips: Markets Wrap

(Bloomberg) — Asian bonds declined and the dollar remained under pressure after a rally in Treasuries faded, with investors betting that US efforts to contain borrowing costs through buybacks may offer only a temporary reprieve.

Bonds in Australia and New Zealand opened lower after 30-year US bond yields rose Thursday even as Treasury Secretary Scott Bessent flagged scope for larger debt buybacks and an upcoming fiscal plan. The yield climbed six basis points to close the session at 5.25%, recouping most of the decline sparked by the Treasury’s surprise decision to increase buybacks of long-dated bonds. The 10-year yield erased its losses to close at 4.70%.

Elsewhere, Asian stocks followed Wall Street lower with MSCI’s Asia Pacific equities gauge falling 0.2%. Earlier, the S&P 500 Index dropped 0.9%, with Walmart Inc. sinking the most since 2022 after disappointing sales. The Nasdaq 100 fell 0.7% for a fifth straight loss.

Some relief for markets came early Friday with Brent slipping 0.7% to $93.10 a barrel. The commodity had rallied for five days as President Donald Trump threatened Iran with “economic warfare” and said Tehran had failed to accept a deal.

The moves in bonds extended a volatile stretch on Wall Street as a series of Treasury decisions underscored growing concern over elevated long-term yields. Lofty government financing costs are feeding through to the broader economy and weighing on equities, after years of elevated inflation and government spending.

While traders initially cheered Wednesday’s move, the enthusiasm didn’t last long because it doesn’t address the overarching reasons for the rise in yields, said Mark Malek, chief investment officer of Muriel Siebert & Co.

“It was just a housekeeping move destined to be short-term, at best,” he said.

In other corners of the market, the yen stayed steady after Japan’s key price gauge accelerated for a second month, keeping the Bank of Japan on track for another near-term interest rate hike as market speculation builds over a move as soon as September.

The yen traded around 158.90 per dollar after sliding past the 159 level in the prior session.

A Bloomberg gauge of the dollar’s strength edged lower early Friday, while gold steadied around $4,530 an ounce.

Bitcoin surpassed $70,000 for the first time in over two months after a high-stakes meeting Trump held with crypto industry leaders. The original crypto currency traded at about $72,600 early Friday.

Early attention in Asia is also on technology stocks. Samsung Electronics Co. plans to announce Friday a new shareholder return package that could be worth as much as 110 trillion won ($79 billion), according to a person familiar with the matter.

What Bloomberg Strategists Say…

“Japanese long-bond yields will have an upward trajectory as the influence from Treasuries will mean more to traders than Japan’s inflation data. Moreover, investors will be more interested in next week’s Tokyo CPI reading that will give a more timely inflation update before the September BOJ meeting.”

— Mark Cranfield, Markets Live Strategist. For more on the analysis, click here.

Meanwhile, Bessent played down Thursday’s market moves, saying “anything that happens within a 24-hour period is noise.” He also said the expanded buyback operations “could be more than the $4 billion” size planned to start next month.

Market participants are warning that a lack of predictability when it comes to the US Treasury’s debt management strategy could ultimately portend higher borrowing costs.

Investors and analysts at JPMorgan Chase and Co., Jefferies LLC and PGIM Inc. say that surprises stand to increase term premium, or the extra compensation demanded in the market to offset potential risks, on US government debt.

“My view is that the ‘Bessent put’ is still going to fail to keep yields down from multi-decade highs over the longer term,” said Hardika Singh at Fundstrat Global Advisors. “Making yields go down over the longer period will require the painful work of bringing down the debt.”

Corporate Highlights:

Anthropic PBC expects to match or beat the size of SpaceX’s record-setting initial public offering, according to people familiar with the matter. Alibaba Group Holding Ltd.’s profit plunged more than 75% after the Chinese company ratcheted up quarterly capital spending to almost $10 billion. Broadcom Inc. is in talks with a group of lenders to raise more than $60 billion in debt for an AI chip financing deal that will benefit Anthropic PBC and other companies, according to people with knowledge of the matter. Super Micro Computer Inc. completed an independent probe into the alleged smuggling of Nvidia Corp. chips into China, with the investigation team concluding the current senior management had no knowledge of the purported scheme. Deere & Co. jumped after the tractor maker said it’s seeing a boost in orders for its machinery, raising hopes that the agriculture sector is poised for recovery. Some of the main moves in markets:

Stocks

S&P 500 futures rose 0.1% as of 9:02 a.m. Tokyo time Hang Seng futures were little changed Japan’s Topix fell 0.4% Australia’s S&P/ASX 200 fell 0.2% Euro Stoxx 50 futures fell 0.4% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1687 The Japanese yen was little changed at 158.96 per dollar The offshore yuan was little changed at 6.7238 per dollar The Australian dollar was little changed at $0.7121 Cryptocurrencies

Bitcoin rose 0.7% to $73,136.24 Ether rose 0.4% to $2,328.47 Bonds

The yield on 10-year Treasuries was little changed at 4.70% Australia’s 10-year yield advanced four basis points to 5.05% Commodities

West Texas Intermediate crude fell 0.7% to $86.19 a barrel Spot gold rose 0.2% to $4,525.10 an ounce This story was produced with the assistance of Bloomberg Automation.

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