Asian markets retreated in early trading Friday, after Wall Street ended lower as bond yields continued to surge.
Japan’s Nikki 225 NIK,
On Wall Street, stocks finished sharply lower Thursday as another jump in U.S. Treasury yields reflected expectations for faster economic recovery and inflation. The Dow Jones Industrial Average DJIA,
Long-term U.S. bond yields have risen in the past six weeks as economic data has improved and the $1.9 trillion fiscal stimulus bill combined with the Fed’s easy-money policy has raised the specter of inflation. On Thursday the yield on the 10-year Treasury note TMUBMUSD10Y,
“There is a palatable fear brewing that the Federal Reserve’s monetary policy will spur on inflation to a level that will ultimately force their hands sooner than later,” Stephen Innes, chief global markets strategist at Axi, wrote in a note. “Indeed this is adding to the high degree of inflation uncertainty which is the biggest tail risk the market is now dealing with.”
Meanwhile, U.S. and Chinese officials met in Alaska, but opening remarks were decidedly pointed and contentious. The world’s two largest economic powers remain at odds over a number of key issues, including trade and human rights.
After sinking 7% Thursday — its worst day since September — benchmark U.S. crude CLJ21,
The dollar USDJPY,