SYDNEY Reuters -- Asian stocks limped toward a fourth consecutive week decline on Friday and bonds nursed big losses as investors tried to catch up with the U.S. Federal Reserve'sFederal Reserve's interest rate outlook, while currency markets were on edge at the end of a wild week.
Another round of dollar buying that put other assets on the run has been caused by Fed projections for aggressive hikes and persistently high rates over the next year or so.
The world's stocks hit two-year lows on Thursday and are down 3% this week. Japanese authorities stepped in to the market for the first time since 1998 to buy yen and stop its slide, as the euro and yen fell to 20 year lows.
The yen has gone up to 142.20 per dollar and is on course for its best week in more than a month and has tapped the brakes on the broader dollar gains. FRX In regional markets, MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5% to a two-year low. It is down 3% this week. Japan's Nikkei was closed for a public holiday marking the autumn equinox.
Overnight, Wall Street indexes fell and longer-dated U.S. Treasuries were dumped - sending the 10 year yield up about 20 basis points to 3.71%, as traders tried to adjust to the prospect of U.S. interest rates above 4% for some time.
Westpac's head of rates strategy, Damien McColough, said the 10 year period was playing catch up to the newly calibrated cash rate.
If you believe the front-end is going to peak at 4.60%, can you sustain 10 year bond yields at 3.70%? He said something.
It's very skittish price action and I think this volatility will continue in all markets in the near term until the rates market settles. S&P 500 futures fell 0.1% higher and European futures rose 0.4% early in the Asia session.
Britain, Sweden, Switzerland and Norway are among the hikers this week, leading to heavy selling in European bond markets, particularly gilts, as interest rates are rising sharply. GB But the outlook of the Fed has overshadowed that in the currency market as both safety flows and higher yields help the dollar, while an energy crisis and war on the doorstep weighs down the euro.
The euro was the last at $0.9844, a fraction over Thursday's 20 year trough at $0.9807 - although all eyes are on the yen.
Japan did not reveal its size or details of its yen buying, but the dollar yen took two big legs lower during late Asia and London trading on Thursday and the risk of another is probably enough to scare off speculators for a while.
James Malcolm, UBS strategist, said that it changes the market dynamic in terms of risks-reward for short-term players.
The Australian and New Zealand dollars were close to their lowest levels since mid 2020, with the Aussie last at $0.6638 and the kiwi at $0.5852. The AUD was at its lowest point in nearly four decades at $1.1226. The yuan of GBP China is close to its lowest level in more than two years and is within striking distance of a record low, as it is 7.0964 per dollar in offshore trade on Friday. Oil is experiencing a small weekly loss as rate hikes raise demand concerns. On Friday, the price of crude oil hovered at $90.58 in Asia. O R Gold, which pays no income, has suffered as the U.S. yields went up and it was last flat at $1,671 an ounce.
The price of cryptocurrencies was battered amidst the flight from risky assets and was held at $19,322.