Asian shares took a breather on Monday while Treasury yields were at 10-month highs as"trillions" in new U.S. fiscal stimulus plans were set to be unveiled this week, stoking a global reflation trade.
"Asia has come through the second global crisis this millennium with its credentials," said ANZ chief economist Richard Yetsenga. "For the first time the global semiconductor sector's market capitalisation has surpassed energy," he said."At the time of the last crisis, 12 years ago, the energy sector was more than five times larger."Longer-term Treasury yields were at their highest since March after Friday's weak jobs report only fanned speculation of more U.S. fiscal stimulus now that the Democrats have control of the government.
With the Fed reluctant to purchase more longer-dated bonds, 10-year Treasury yields jumped almost 20 basis points last week to 1.12%, the biggest weekly rise since June.Mark Cabana at BofA warned stimulus could further pressure the dollar and cause Fed tapering to begin later this year. Earnings will also be in focus as JP Morgan, Citigroup and Wells Fargo are among the first companies to release fourth-quarter results on Jan. 15.