LIVE MARKETS-A sharper US Treasury selloff in Tokyo
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A SHARPER US TREASURY SELLOFF IN TOKYO
Bond yields have been rising as the conflict in the Middle East has stoked inflation concerns and reinforced expectations that central banks will become more hawkish.
However, market participants are increasingly questioning whether U.S. Treasuries face further selling pressure, with investors trimming exposure on concerns over a prolonged supply shock and the risk of larger fiscal deficits in the U.S.
Deutsche Bank analysts examined movements in the U.S. 10‑year yield across the Tokyo, London and New York trading sessions and found that selling tends to be most pronounced during Tokyo hours.
“The upward pressure (on yields) has been notably more pronounced during Tokyo hours,” DB analysts say.
Bond yields rise when a selloff drives prices down.
“Our forex strategy colleagues have pointed to potential forex interventions by Asian central banks selling Treasuries, which would fit this observation,” they add.
“Correlations are close to zero across all comparisons (among moves in Tokyo and London and New York), suggesting that price action during Tokyo hours is driven more by independent investment decisions rather than the same data or news flow affecting other sessions.”
This observation supports the view that the Asia selloff reflected policy‑level institutional decisions, rather than market participants reacting to moves elsewhere.
(Stefano Rebaudo)
EARLIER ON LIVE MARKETS:
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SOME RESPITE FOR NERVY MARKETS AFTER BRUTAL MONTH CLICK HERE
