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Asian markets on Monday unwound most of a Friday selloff in the wake of Trump’s COVID-19 diagnosis. With his improvement, Wall Street rallied sharply overnight with, energy, tech and healthcare stocks leading. The Dow rose 1.7%, the S&P 500 1.8% and the Nasdaq 2.3%.
Bond markets also joined in, with the safe-haven asset being sold – especially at the long end – in line with the optimistic mood. The yield on US 30-year government bonds rose 10 basis points to a four month high of 1.5930%.
Benchmark 10-year yields hit a more than five-week high, and held there in early Asian trade at 0.7784%.
“Improved near-term stimulus prospects and then potentially bigger deficits under a Biden presidency that has the benefit of clean sweep, are behind the yield gains here,” said Ray Attrill, head of FX strategy at National Australia Bank in Sydney.
In currency markets, the dollar was under pressure on other majors apart from the yen, since higher yields can often draw flows from Japan.
The yen last traded steady at 105.73 per dollar. The risk-sensitive Australian and New Zealand dollars edged ahead, with the Aussie last up 0.1% at $0.7191 and the kiwi at $0.6651.
The euro was just below a two-week high hit overnight at $1.1789.
Oil jumped more than 5% overnight and held there in Asia, supported by optimism surrounding Trump’s health and a supply squeeze owing to a strike at Norwegian oilfields.
US crude was last steady at $39.25. Brent crude rose 0.2% to $41.36. Gold was steady at $1,912 an ounce. (Reporting by Tom Westbrook; editing by Richard Pullin)