China markets about flat as Asia markets fall; yen at 150-levels

Abigail Ng

Shares in the Asia-Pacific mostly traded lower on Friday as investors await inflation data from several economies.

The Nikkei 225 in Japan slipped 0.36% and the Topix lost 0.56%. Japan’s yen weakened further to touch 150.28 overnight after hitting 150 against the dollar on Thursday.

Japan’s core consumer prices for the month of September rose 3% compared to a year ago, while Hong Kong and Malaysia are slated to release its inflation data later in the day.

Hong Kong’s Hang Seng index rose 0.32% in early trade. The Shanghai Composite in mainland China gained 0.10% and the Shenzhen Component was marginally down. In Australia, the S&P/ASX 200 fell 0.64%. South Korea’s Kospi dipped 0.37% and the Kosdaq shed 0.59%. MSCI’s broadest index of Asia-Pacific shares was 0.5% lower.

TICKER	COMPANY	NAME	PRICE	CHANGE	%CHANGE
.N225	Nikkei 225 Index	*NIKKEI	26935.74	-71.22	-0.26
.HSI	Hang Seng Index	*HSI	16228.72	-51.5	-0.32
.AXJO	S&P/ASX 200	*ASX 200	6692.8	-37.9	-0.56
.SSEC	Shanghai	*SHANGHAI	3039.88	4.83	0.16
.KS11	KOSPI Index	*KOSPI	2209.3	-8.79	-0.4
.FTFCNBCA	CNBC 100 ASIA IDX	*CNBC 100	6765.07	-45.23	-0.66

U.S. stocks fell on Thursday as investors digested earnings and rising Treasury yields. The Dow Jones Industrial Average dipped 90.22 points, or 0.30%, to 30,333.59. The S&P 500 shed 0.8% to 3,665.78. The Nasdaq Composite lost 0.61% to close at 10,614.84.

The benchmark 10-year Treasury yield marked a high of 4.239% on Thursday stateside, trading at levels not seen since 2008.

— CNBC’s Jesse Pound and Sarah Min contributed to this report.

CNBC Pro: Here’s what to invest in as yields rise again, BlackRock and others say

Yields are rising again, and the path of interest rate hikes seems set to continue.

For investors, that means that they should seize the opportunity now to put their cash in bonds or Treasurys – particularly the ones with the shortest durations, analysts said this week.

Wells Fargo said investors should seize the somewhat of a short-lived nature of this opportunity now.

—Weizhen Tan

South Korea’s trade deficit reaches $4.95 billion for October so far

South Korea’s trade deficit for the first 20 days of October widened to $4.95 billion, data from the customs agency showed, after recording a deficit of $4.1 billion for the same period in September.

Exports for Oct.1.-20 dropped 5.5% compared to a year ago, less than the 8.7% drop in September from the same period in 2021.

Imports rose 1.9% annually, after rising 6.1% last month.

—Jihye Lee

Early trade: Where Asia-Pacific markets started the day

The Nikkei 225 in Japan slipped 0.24% in early trade and the Topix lost 0.33%.

In Australia, the S&P/ASX 200 fell 0.68% in its second hour of trade.

South Korea’s Kospi dipped 0.23% and the Kosdaq shed 0.37%.

MSCI’s broadest index of Asia-Pacific shares was 0.43% lower.

— Abigail Ng

Core consumer prices in Japan rose 3% in September

Core inflation in Japan rose 3% in September from a year ago, government data showed. That’s in line with analyst expectations and a slight increase compared to August’s 2.8% rise.

The index for core inflation excludes volatile fresh food, but includes fuel costs.

The headline inflation also came in at 3% in September, above the Bank of Japan’s 2% target and the highest since September 2014.

Excluding fresh food and energy, core consumer prices increased by 1.8% in September from the same period a year ago.

— Abigail Ng

Stocks fall for second day

Stocks finished in the red on Thursday, but did manage to close above their lows of the session even with a sharp afternoon rise for Treasury yields. The Dow, S&P 500 and Nasdaq Composite are all up more than 2% of the week even after two straight negative sessions.

— Jesse Pound

Bond market spooked by market bet that Fed will raise rates to 5% or more

The jump to 5% in May fed funds futures Thursday rattled Treasurys, and sent yields higher across the curve.

“It’s the speed of this move that is most jolting, ” said Peter Boockvar of Bleakley Advisory Group. For instance, the 10-year Treasury yield leapt to 4.22% Thursday afternoon, from a low of about 4% Wednesday morning.

Strategists said markets are fearing a more aggressive Fed, and the move in fed funds futures to a 5% terminal rate shook bond investors. The May contract was pricing the terminal rate at 5.01% Thursday afternoon.

The terminal rate is the level where the Fed would stop raising interest rates.

—Patti Domm

10-year Treasury yield shoots higher, becomes “unanchored”

The benchmark 10-year Treasury yield hit 4.22% Thursday after, jumping more than 20 basis points in two sessions.

Bond strategists say the move has been too quick, and the 10-year should start to find a stopping point. (A basis point equals 0.01 of a percentage point)

“I think 4% was reasonable,” said Wells Fargo’s Michael Schumacher. “4.22% has become unanchored. We don’t need the 10-year to act like a meme stock. That is not healthy.”

The yield, which moves opposite price, has been screaming higher on concerns the Federal Reserve will be even more aggressive, and that central banks will stay in tightening mode well into the future.

Gargi Chaudhuri, head of BlackRock’s iShares investment strategy in the Americas, said as long as yields continue to move higher stocks will suffer.

“Can we see another 25 [basis points] or so? I think maybe. We’re getting to levels where we could peak but markets could extend,” said Chaudhuri. “The market is overextending but things get exaggerated to both sides…especially as we go into the remainder of the year and quantitative tightening continues to happen.”

Fed funds futures, for the first time Thursday, rose above 5% for next May, signaling traders expect the Federal Reserve to raise its fed funds target rate to that level before stopping. That helped drive Treasury yields higher across the curve.

–Patti Domm

Sterling buoyant and gilt yields lower as UK PM Liz Truss resigns

Sterling is up 0.5% to trade at around $1.1214 early afternoon following the resignation of Liz Truss as U.K. Prime Minister. Government bonds also reacted positively to the news, with 10-year gilt yields falling four basis points to 3.842%.

— Hannah Ward-Glenton

UK Prime Minister Liz Truss resigns

Liz Truss announced she is resigning as British Prime Minister as she was elected “with a mandate for change” but was not able to “deliver that mandate.”

— Hannah Ward-Glenton

Source : CNBC