Rising US bond yields pose a threat to Asia’s stock rally, as growing inflation fears offset ongoing optimism over benefits from the artificial intelligence boom.
Over the past five years, the MSCI Asia Pacific Index has fallen in 16 of the 19 weeks when the US 10-year Treasury yield rose by 20 basis points or more, losing 1.6% on average, according to data compiled by Bloomberg. Last week followed that pattern.
That trend is a reminder that Asia’s role in global equity portfolios remains vulnerable to the same pressures now testing stocks worldwide.
Spiking bond yields indicate bets that war-driven gains in oil will push central banks to raise rates, potentially choking off growth.
Last week marked a change in the pattern of equities shrugging off bond market fears and gaining on AI expectations, Gavekal Research’s analyst Udith Sikand wrote in a note.
“Now, the bond market’s message seems to be striking home: inflation is here to stay.”
Bloomberg
