Asian Stocks Down, Bond Yields Down and Investors Await U.S Treasury Auctions By

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By Gina Lee – Asia Pacific stocks were mostly down Tuesday morning, as investors awaited a slew of U.S. Treasury auctions and bond yields continued Monday’s decline.

China’s was down 0.85% by 11:01 PM ET (3:01 AM GMT) and the fell 1.05%. Chinese relations with the U.S., U.K., the European Union, and Canada soured as they over alleged human rights abuses on Xinjiang’s Uyghurs.

Hong Kong’s slid 1.57%. Baidu (NASDAQ:) Inc (HK:) made its Hong Kong debut earlier in the day, with shares rising more than 1% from their issue price in early Asian trading.

Japan’s inched up 0.07% and South Korea’s was down 0.50%.

In Australia, the edged up 0.19%.

The ten-year U.S. Treasury yield eased from its highest level in over a year, raising hopes of improved demand in the U.S. Treasury’s auctions of two-, five- and seven-year debt throughout the week. Friday’s seven-year note auction is of particular interest as the maturity fared poorly in February’s auction, sending benchmark yields sharply higher.

Investors, who had been worried that a strong economic recovery from COVID-19 would trigger inflation and a pullback in central bank stimulus, breathed a sigh of relief as bond yields stabilized.

U.S. Federal Reserve Chairman Jerome Powell said that the U.S. economy had progressed “more quickly than generally expected and looks to be strengthening”. However, he also added that it still far from fully recovering from the COVID-19-inflicted damage.

Powell’s comments were prepared for his first joint appearance with Treasury Secretary Janet Yellen before the U.S. House Financial Services Committee later in the day, where they will testify on Fed and Treasury COVID-19 policies.

“The rotation we see day-to-day at the moment is driven by that volatility in Treasury yields — when yields go up, we see tech sell off and a rotation into value… that is fairly normal in early cycle, in the uncertainty around monetary policy,” Oreana Portfolio Advisory Services global chief investment officer Isaac Poole told Bloomberg,

Poole also said that he sees long-dated yields breaching 2% in 2021, to value stocks’ benefit.

Across the Atlantic, investors are also keeping an eye on Turkey. They continue to digest President Recep Tayyip Erdoğan’s replacement of hawkish central bank governor Naci Agbal with Sahap Kavcioglu over the weekend.

The uneven global economic recovery from COVID-19 also capped stocks’ gains. Some European countries, including Germany, extended or re-imposed restrictive measures, while New York City mayor Bill de Blasio pressed pause on the city’s reopening due to insufficient information about COVID-19 variants.

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