* Ten-year Treasury yields hit 1.3330%; yen hits 5-month low
* MSCI AxJ creeps to new record peak
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* Global asset performance http://tmsnrt.rs/2yaDPgn
By Tom Westbrook and Kevin Buckland
SINGAPORE/TOKYO, Feb 17 (Reuters) - Stock markets scratched
out a new record peak in Asia on Wednesday, but their rally lost
a bit of steam as a surge in U.S. Treasury yields put pressure
on both lofty company valuations and hard-running commodity
currencies.
Benchmark ten-year Treasury yields US10YT=RR made a fresh
one-year high to trade near pre-pandemic levels, as vaccine
progress and encouraging economic data begin to drive an intense
investor focus on an inflation pulse now widely expected.
The prospect of better risk-free returns stalled equities
and lent support to the U.S dollar. MSCI's broadest index of
Asia-Pacific shares outside Japan .MIAPJ0000PUS eked a 0.3%
gain, and a record, while Japan's Nikkei .N225 fell 0.3%.
FTSE futures FFIc1 rose 0.2% while EuroSTOXX 50 futures
STXEc1 traded just below flat and S&P 500 futures ESc1
traded just above flat. Ten-year Treasury yields, up nearly 40
basis points this year, rose as far as 1.3330% before easing.
"The bond market is just focusing on what we have ahead of
us," said Masahiko Loo, a Tokyo-based portfolio manager at
AllianceBernstein.
"The immediate thing is the stimulus package ... and on top
of that, this view that people have of inflation trending higher
is encouraging them to sell bonds," he said.
Investors, for now, do not think central banks will do
anything about it anytime soon, and minutes later on Wednesday
from the U.S Federal Reserve's January meeting are expected to
reinforce that view.
The gap between ten-year and two-year U.S. yields
US2US10=TWEB also hit its widest point in nearly three years
in anticipation of short-term rates going nowhere. US/
"Policy rates fairly surely will be virtually zero in a
couple of years time," said Rob Carnell, chief economist in Asia
at ING. "It's just that prospect that things can be a little
stronger, and instead of 1% or lower inflation it's perhaps 2%
or a little bit higher, that's enough (to lift yields)."
Besides a cooling in stock-market exuberance, gold and the
Japanese yen JPY= , have been other casualties of the rise in
rates. Gold, which pays no income, tends to fall when yields
rise and it touched a two-week low on Wednesday. GOL/
The yen is sensitive to U.S. rates because Japanese yields
are anchored and higher U.S. returns can attract investment
flows out of yen and into dollars. The yen hit a five-month low
against the dollar on Wednesday and has lost 2.7% this year.
CHILL
Gains in commodity prices have been another big driver of
inflation expectations and that has caught a further boost from
a Texas cold snap that has shut down about a fifth of U.S. oil
production and sent energy prices sharply higher. O/R
Front-month gas futures NGc1 also jumped as much as 10% to
a more than three-month high, and although a stronger U.S.
dollar has since pared gains, oil is near 13-month peaks.
U.S. crude futures CLc1 rose 0.1% to $60.11 a barrel on
Wednesday and Brent crude futures LCOc1 rose 0.2% to $63.50 a
barrel.
In currency markets, the dollar's strength was applying
broad pressure. The euro EUR=EBS dipped below its 20-day
moving average to $1.2083. Sterling, which has been surging as
vaccinations roll out rapidly across the United Kingdom, was
forced back below $1.39 and last sat at $1.3874. FRX/
Cryptocurrency bitcoin BTC=BTSP rose, again, through
$50,000 as signs of big investor interest in the asset drive
more and more buying. Ahead on Wednesday investors will be eyeing inflation data
releases in Britain and Canada for any signs of a jump and U.S.
retail sales data is also due.
Earnings reports this week from Hilton Worldwide Holdings
Inc HLT.N , Hyatt Hotels Corp H.N and Marriott International
Inc MAR.O will also be scrutinized for signs of a pickup in
global travel demand.
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Global assets http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Emerging markets http://tmsnrt.rs/2ihRugV
MSCI All Country World Index Market Cap http://tmsnrt.rs/2EmTD6j
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