US Treasuries at five-week low ahead of Fed minutes

by: Hudson Lockett in Hong Kong

Tuesday 06.00 BST

Overview

Asian bonds rallied on Tuesday and yield on US Treasuries dipped to a five-week low ahead of key US events later in the week, while sentiment on South Africa’s rand soured further after S&P downgraded the country’s credit rating.

Hot topic

The yield, which moves inversely to price, on 10-year US Treasuries rose 1 basis point after dropping as low as 2.3212 per cent on Tuesday — the lowest since February 27. Minutes from the Federal Reserve’s latest meeting and US payrolls data are due out later this week.

Sovereign bonds across Asia were enjoying a fillip after the Reserve Bank of Australia held interest rates at 1.5 per cent.

Yield on Australia’s 10-year government bonds was down 8 basis points at 2.585 per cent, the lowest since November 17. That of New Zealand’s 10-year notes fell the same amount to 3.062 per cent.

South Korean 10-year government bond yield was down 2bp at 2.133 per cent, while the yield on 10-year Japanese government bonds fell a similar amount to 0.057 per cent.

Equities

Tokyo-listed shares in Toshiba dropped as much as 10.7 per cent on reports that the troubled conglomerate may require further financial aid. The shares ended Monday 5.5 per cent lower on reports that the company would probably miss another deadline for its quarterly earnings.

The Topix index was off 1.2 per cent.

In Sydney, the S&P/ASX 200 index was down 0.3 per cent, although materials companies edged up 0.3 per cent after Australia recorded its second-highest nominal trade surplus on record for February, bolstered by strong commodity prices.

Markets in Hong Kong, China and Taiwan were closed for a holiday.

Forex

The greenback was down slightly in Asia trading, with the dollar index — measuring the buck against a basket of peers — off 0.1 per cent as a stronger yen offset gains against some less prominent currencies.

The Australian dollar, which was trading flat ahead of the RBA’s interest rates decision, dropped 0.3 per cent to $0.7581. The yen meanwhile strengthened past ¥110.5 per dollar on Tuesday to the firmest level in five sessions.

Worst off was South Africa’s rand, which fell another 0.8 per cent to 13.7998 per dollar, taking it 5.8 per cent weaker since President Jacob Zuma fired his finance minister and eight other ministers on Thursday evening. The rand closed Monday down 2 per cent after S&P cut the country’s credit rating.

South Korea’s won was 0.3 per cent weaker at Won1,118.18 per dollar.

Commodities

Oil prices were steady in Asia trading after a drop late in the Monday session. Brent crude, the international benchmark, was trading flat at $53.12 a barrel. West Texas Intermediate, the US marker, was also flat at $50.22.

Gold rose 0.2 per cent to $1,256.27 per ounce.

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