Markets licking their wounds from the bond rout, Sino-US tensions, vaccines eyed

Markets are in a more cautious mood as rising yields have been weighing on stocks and keeping the dollar bid. The BOJ’s decision rattled Japanese shares and Canadian retail sales are eyed. Sino-American talks have resulted in rows. European countries are resuming usage of AstraZeneca’s vaccine, while Britain is concerned about supply issues.

Returns on US ten-year Treasuries hit a high above 1.75% on Thursday, supporting the dollar and sending stocks down, especially tech ones. The drop of these bond yields to around 1.70% on Friday provides only temporary calm.

Alaska encounter: Another factor weighing on markets is the high-level meeting between US and Chinese officials. Representatives of the world’s largest economies criticized each others’ civil rights record, putting in doubt a summit between US President Joe Biden and his Chinese counterpart Xi Jinping that Beijing had suggested.

The Bank of Japan widened the band that ten-year JGBs can float within as previously leaked. While the yen is stable, the BOJ’s decision to focus its ETF buys on shares trading in the Topix index sent it surging while other equities plunged.

EUR/USD is hovering around 1.19, far from the weekly highs. The European Medicines Agency stated that the AstraZeneca COVID-19 vaccines are safe and effective, and several European countries will resume inoculations.

GBP/USD is trading around 1.39, amid concerns that a slowdown in the supply of doses will grind the vaccination campaign to a halt. The Bank of England left rates unchanged on Thursday and acknowledged an improvement in conditions. However, it is waiting for “clear evidence” on inflation before acting.

USD/CAD is changing hands around 1.25, hit by dollar strength and also by a fall in petrol prices. WTI Crude Oil is changing hands at around $60 as some OPC+ members are reportedly worried that prices could fall if output cuts are not extended in early April. Canadian retail sales figures are due out on Friday.

Cryptocurrencies are off their highs, with Bitcoin trading around $58,000. Previous weekends have proved volatile for digital assets.

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