Shanghai locks affect oil, securities and the yen

Outside a brokerage firm in Tokyo, Japan, on March 10, 2022, in the midst of an outbreak of corona virus disease (COVID-19), a man wearing a safety mask passes by an electronic board displaying maps (above) of the Nikkei code. REUTERS / Kim Kyung-Hoon

LONDON, March 28 (Reuters) – Oil prices fell on Monday on concerns over weak demand for a corona virus lockout in Shanghai, while the yen’s gusting descent continued as the Bank of Japan blocked higher yields.

Global stocks were mostly flat in the face of another brutal sell-off in major securities markets.

Ten-year U.S. Treasury yields pushed sharply above the 2.5% mark for the first time since 2019, two-year bond yields in the Netherlands and Belgium turned positive for the first time since 2014, and even Japanese yields had a new impact despite central bank intervention. Maximum in six years.

The other eye-popping move came from Yen, which fell nearly 1.5%.

China’s financial center, with a population of 26 million, meanwhile told all companies to suspend production or work people remotely in two phase locks in nine days. read more

The range of restrictions by the world’s largest oil importer fell to $ 116.33 from Brent $ 4.35, while US crude fell $ 4.5 or 4% to $ 109.38.

Chinese blue chips though (.CSI 300) Japan’s Nikkei fell 0.6% (.N225) Lost 0.7%, and US stock futures weakened, with weaker oil prices boosting broader European stocks. (.STOXX).

MSCI’s Global Stock Index Plate (.MIAPJ0000PUS)Very determined in the face of the Federal Reserve and rising bond yields.

The sense of danger was helped by the hope that progress would be made in the Russian-Ukrainian peace talks to be held in Turkey this week, with President Volodymyr Zhelensky saying that Ukraine was ready to discuss adopting neutrality as part of an agreement. nL2N2VU0EH]

“The sentiment in stock markets buying positive headlines from the war in Ukraine is surprisingly flexible,” said Nordia’s chief analyst John van Kerich.

“The revaluation, which will continue at the short end of the US yield curve, is currently taking place very fast, with no effect on Wall Street.”

Citi predicted last week that the Federal Reserve would tighten 275 basis points this year, including half-point hikes in May, June, July and September.

Yield increase

Expectations that the central bank would push harder and faster to control four-decade-high inflation continued to hit sovereign bond markets.

Two-year Treasury yields in London trade rose about 10 basis points to 2.41% since the beginning of 2019. Ten-year yields hit a new high of over 2.5%.

And a measure of U.S. bond yields – the gap between the five- and 30-year treasury yields – reversed for the first time since 2006, when recession risks are increasingly priced.

Timothy Groff, head of State Street for EMEA Macro Strategy, said selling bonds was “the path to less resistance now.”

“The central bank is not giving any indication that if they provoke hawk guidance, it will slow down,” he added.

Eurozone bond markets continued their move to positive-yield territory, while investors expect a 60 bps rate hike from the European Central Bank by the end of the year, up from 50 bps last week.

Australia’s 3-year bond yield has risen to 2.386%, the highest level since 2014.

Japan’s 10-year government bond rose to a new six – year high of 0.25%, reaching the peak of the Bank of Japan’s policy bond even after the central bank stepped in to try to control it.

The BOJ has strengthened its super-loose policy to buy as many securities as needed to keep 10-year returns below 0.25%.

It rose to a high of 123.82 yen after August 2015, giving a return of more than 7% for the month. Similarly, the affluent Australian dollar rose more than 10% to 93.20 yen this month.

The euro lost about 2.3% against the dollar over the same period, but $ 1.0954 is slightly higher than the recent two-year high of $ 1.0804.

In commodity markets, gold fell to $ 1,931 an ounce, down about 1.3%.

Report by Tara Ranasinghe, Editing by William McLean

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