SYDNEY- A holiday in Japan made for thin trading in Asia and action was confined to a modest rise in the dollar, gains for bitcoin and selling US bonds. Benchmark 10-year Treasury yields were up almost five basis points in early London trade.
US Treasuries slipped and the dollar firmed on Monday as investors wagered the attack on US presidential candidate Donald Trump made his victory more likely, while injecting a whole new level of political uncertainty into markets.
Investors have tended to react to the prospect of a Trump win by pushing Treasury yields higher, in part on the assumption his economic policies would add to inflation and debt.
Proposals to levy tariffs on imports would push prices higher while eating into consumer spending power. Meanwhile, restrictions on immigration could tighten the labor market and put upward pressure on wages.
“The market reaction function to a Trump presidency has been characterized by a stronger US dollar and a steepening of the US Treasuries curve, so we might observe some of that this coming week if his election odds are assessed to have further improved following this incident,” said Rong Ren Goh, a portfolio manager at Eastspring investments in Singapore.
Online betting site PredictIT has a Republican win at 66 cents, from 60 cents on Friday, with the Democrats at 38 cents. The current odds indicate that Republicans are twice as likely to win the election as Democrats.
The dollar edged up 0.3 percent on the Japanese yen to 157.96 but remained well short of its recent 161.96 top following a bout of suspected intervention.
The euro eased slightly to $1.0893 while bitcoin – seen benefiting from lighter regulation under a Trump administration – was up about 4 percent at a two-week high.
Futures for 10-year Treasuries slipped 13 ticks in the Asia session and 10-year yields rose 4.8 basis points to 4.2353 percent in early cash trades in London.
S&P 500 futures and Nasdaq futures were both marginally higher. European futures fell 0.5 percent and FTSE futures were down 0.3 percent.
Japan’s Nikkei was shut, but futures were trading at 41,285 compared to a cash close of 41,190.
