GLOBAL MARKETS-Asia stocks spooked by spike in yields, oil sell-off

* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Asia shares mostly weaker after Wall St skid
* US 10-yr yields at 1.72%, near 14-month high
* BOJ expected to widen yield band slightly
* Oil slips further after losing a month of gains

By Wayne Cole
SYDNEY, March 19 (Reuters) - Asian share markets eased on
Friday as a spike in global bond yields soured sentiment toward
richly priced tech stocks, while a stampede out of crowded
positions in crude oil caused the sharpest setback in months.
Having plunged 7% overnight, Brent crude futures LCOc1
were down another 38 cents at $62.90 a barrel, while U.S. crude
CLc1 shed 35 cents to $59.65. O/R
The retreat wiped out four weeks of gains in a single
session and might mark the end of a five-month bull run.
Equities were also choppy as a pullback on Wall Street
knocked Japan's Nikkei .N225 down 0.7% and South Korea .KS11
1%. MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS followed with a fall of 0.5%.
Nasdaq futures NQc1 edged up 0.1%, after a sharp 3% drop
overnight, while S&P 500 futures ESc1 added 0.2%.
Markets are now braced for the outcome of a Bank of Japan
policy meeting where it is widely expected to loosen its control
of bond yields and trim buying of ETFs, tweaks aimed at making
the stimulus package more sustainable. Investors are still reflecting on the U.S. Federal Reserve's
pledge to keep rates near zero out to 2024 even as it lifted
forecasts for economic growth and inflation.
Fed Chair Jerome Powell seems likely to drive home the
dovish message next week with no less than three appearances
lined up. "Stronger growth and higher inflation but no rate hikes is a
potent cocktail for risk assets and equity markets," said Nomura
economist Andrew Ticehurst.
"The message for bonds is more mixed: while the anchoring of
the short end is a positive, market participants may come to
worry that the forecast rise in inflation might not be temporary
and that the Fed risks 'overcooking it'."
Yields on U.S. 10-year notes spiked to the highest since
early 2020 at 1.754% US10TY=TWEB and were last at 1.72%. If
sustained, this would be the seventh straight week of increases
worth a huge 64 basis points in total.
The drastic bearish steepening of the yield curve reflects
the risk the Fed is serious about keeping short-term rates low
until inflation accelerates, so requiring longer-term bonds to
offer fatter returns to compensate.
The latest BofA survey of investors showed that rising
inflation and the bond "taper tantrum" had replaced COVID-19 as
their number one risk.
While still very bullish on economic growth, company
earnings and stocks, respondents feared a sharp setback for
equities should 10-year yields cross 2%.
The jump in Treasury yields provided some support to the
U.S. dollar, though analysts fret that faster U.S. economic
growth will also widen the current account deficit to levels
that will ultimately drag on the currency.
For now, the dollar index had bounced to 91.855 =USD , from
a low of 91.30 to leave it slightly firmer for the week.
It also nudged up on the low-yielding yen to 109.01 JPY= ,
just off the recent 10-month top of 109.36. The euro eased back
to $1.1914 EUR= , having repeatedly failed to crack resistance
at $1.1990/1.2000.
The rise in yields has weighed on gold, which offers no
fixed return, and left it flat at $1,732 an ounce XAU= .

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