By Tom Arnold and Hideyuki Sano

LONDON (Reuters) – Issues over excessive U.S. bond yields hit international equities on Thursday as buyers waited to see whether or not Federal Reserve Chairman Jerome Powell would tackle issues about quickly rising prices of borrowing at long run.

The specter of rising US bond yields has additionally plagued low-yielding and safe-haven property, such because the yen, Swiss franc and gold.

Benchmark 10-year US Treasuries slipped to 1.453%. They earlier hit their highest ranges since a one-year excessive of 1.614% set final week on bets on a robust financial restoration aided by the federal government stimulus and progress in immunization applications.

“Equities and returns proceed to spice up and counteract,” mentioned James Athey, chief funding officer at Aberdeen Customary Investments.

“The Fed’s speech continues to specific little or no concern and positively suggests no imminent motion to curb the rise in yields. Powell’s speech immediately is eagerly awaited, however I worry extra out of hope than rational expectation.

Euro STOXX 600 fell 0.5% and London’s FTSE fell 0.6%.

The MSCI World Inventory Index, which tracks shares of 49 international locations, fell 0.5%, its third consecutive day of losses.

MSCI’s Asia-Pacific ex-Japan shares fell 1.8%, whereas Japan’s Nikkei fell 2.1% to its lowest since Feb.5.

Futures contracts on E-mini S&P fell 0.2%. Futures for Nasdaq, the chief of the post-pandemic rally, fell 0.1%, hitting a two-month low earlier.

Tech shares are weak as a result of their excessive valuation has been supported by expectations of a protracted interval of low rates of interest.

However the market is concentrated on Powell, who is because of converse at a Wall Avenue Journal convention at 12:05 p.m. EST (5:05 p.m. GMT), in what might be his final outing earlier than the Fed solely meets March 16-17.

Many Fed officers have performed down the rise in Treasury yields in latest days, though Fed Governor Lael Brainard acknowledged on Tuesday that issues about the opportunity of a speedy rise in yields may dampen the market. financial exercise.

Moreover, concern is mounting over an ongoing regulatory change in a rule referred to as the Further Leverage Ratio, or SLR, that would make it dearer for banks to carry bonds.

“The market will seemingly be risky till this regulatory difficulty is resolved,” mentioned Masahiko Lavatory, portfolio supervisor at AllianceBernstein. “There aren’t any individuals who need to catch a falling knife when the market volatility is so excessive.”

The market may also face an enormous improve in debt gross sales after rounds of stimulus measures to cope with a recession triggered by the pandemic.

The issue will not be confined to the USA, with the yield on British 10-year Gilts hitting 0.796% on Wednesday, near final week’s 11-month excessive of 0.836%, after the federal government unveiled a lot greater borrowing.

Germany’s 10-year yield on Thursday fell 2 foundation factors to -0.31% after rising 5 foundation factors on Wednesday, nonetheless transferring in tandem with US Treasuries.

Foreign money buyers continued to climb in {dollars} as they wager on the US financial system’s outperformance relative to its developed world friends within the months to come back. [FRX/] The greenback hit an roughly seven-month excessive of 107.33 yen.

“The US greenback / yen has been on a one-sided path since early 2021,” mentioned Joseph Capurso, head of worldwide economics on the Commonwealth Financial institution of Australia. “The enhancing outlook for the worldwide financial system is constructive for each the US greenback / yen and the Australian greenback / yen.”

Different secure haven currencies had been weakened, with the Swiss franc falling to a five-month low in opposition to the greenback and a 20-month low in opposition to the euro.

The opposite main currencies had been little modified, with the euro holding regular at $ 1.2054.

Gold fell to a virtually nine-month low of $ 1,702.8 an oz on Wednesday and final stood at $ 1,714.

Investor concentrate on a rebound within the U.S. financial system was not shaken by in a single day knowledge that confirmed the U.S. labor market struggling in February, when non-public payrolls plummeted. elevated lower than anticipated.

Oil costs rose for a second straight session on Thursday, the opportunity of OPEC + producers deciding to not improve manufacturing at a key assembly later within the day supported a drop in US gasoline inventories . [O/R]

US crude rose 0.6% to $ 61.65 a barrel. Brent futures added 0.7% to $ 64.54 a barrel,

(Further reporting by Koh Gui Qing in New York; modifying by Sam Holmes, Richard Pullin, Simon Cameron-Moore, Larry King)