Bonds extend New Year retreat before US data

BLOOMBERG

Bonds extended their drop as traders braced for a swathe of US data that could show whether bets on interest-rate cuts this year are justified. Government debt fell across Europe and US Treasury yields rose, leaving the rate on the 10-year bond up five basis points at 3.98%. The Stoxx 600 benchmark and futures contracts on US shares edged lower. The dollar was flat against its Group-of-10 peers after notching its biggest daily gain since March.
The combined slump for bonds and stocks globally was the biggest for a first full trading day since at least 1999 as traders tempered their enthusiasm on Federal Reserve easing. The question now is whether that was a one-off rout, and the latest Fed minutes, manufacturing and job openings data due on Wednesday may offer clues. “2024 has kicked off with risk retrenchment,” Vishnu Varathan, chief economist for Asia ex-Japan at Mizuho Bank Ltd, said in a note. “Whether this is a durable purge from excessive exuberance or merely pre-NFP profit-taking is unclear,” he said, referring to the US nonfarm payrolls data at the end of the week.
In Asia, China tech stocks are in focus after a report that Beijing removed a top official who oversaw the nation’s gaming industry. That may mean the government is trying to cool a backlash against harsh new regulations that triggered an $80 billion rout across the sector. Tencent Holdings Ltd. and smaller rival NetEase Inc. reversed earlier losses.
Elsewhere, Bitcoin traded stronger for a fifth day, hovering around $45,000, as investors anticipate the US will approve an exchange-traded fund investing directly in the biggest token. Oil held losses after the risk-off tone in markets undercut concern about an escalating conflict in the Red Sea.