The Yen Strengthened and Treasuries Rose A Second Day

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The Yen Strengthened and Treasuries Rose A Second Day

Whereas the yen strengthened and Treasuries rose a second day, European stock-index futures declined. Euro Stoxx 50 Index futures slid 0.5 percent by 7:03 a.m. in London. A similar trend was seen in Standard & Poor’s 500 Index (SPA) where contracts decreased 0.4 percent after the gauge rallied to a record.

Despite strengthening of the yen and Treasuries on the second day, Asian shares fell for the first time in 5 days. Whereas the MSCI Asia Pacific Index lost 0.5 percent, the Shanghai Composite Index declined 1 percent. Interestingly, whereas Japanese Treasuries advanced, the U.S. 10-year yield touched a three-month low.

Japanese Economy Catching Growth

Japanese stocks have been faring better recently and the yen appreciated at least 0.4 percent against all 16 major currencies. Today, the Bank of Japan announced that it is going to buy 800 billion yen ($8.2 billion) of bonds as part of a program to keep borrowing costs low. The stimulus is aimed to fuel growth.

Country’s 10-year Treasury yields declined to as low as 0.6 percent which is the least since May 9 as it touched 2.5 percent. According to market observers though the Bank of Japan’s radical monetary easing in April sparked speculation, several of the Japanese life insurance companies may jump for foreign bonds to earn higher income.

However, contrary to the opinion from market observers, Japan’s Nippon Life Insurance is mulling a plan to increase yen bond holdings in the six months to March. The life insurance company has also not denied buying foreign bonds as a source from the company says that along with buying yen bonds, the company will also be buying dollars and euro on dips.

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China Stocks Slump

In early trade today, Asian stocks erased gains and the regional benchmark index retreated from a five-month high as Chinese shares tumble. The Shanghai Composite Index headed for a three-week low even though China’s money market rates jumped the most since July.

The major loser in today’s trade is China Resources Land Ltd., the second-largest mainland developer traded in Hong Kong. The company shares slipped 2.2 percent. Australia’s S&P/ASX 200 Index declined 0.3 percent, erasing gains of 0.5 per cent

On the other hand, Hyundai Merchant Marine Co. gained 10 percent. The surprising jump came as South Korea’s biggest shipping line by market value refinanced 280 billion won of debt (RM840 million).

To contact the reporter of this story: Jonathan Millet at john@forexminute.com