BENGALURU: Most emerging Asian stocks found their footing and currencies hit a record high on Thursday as a pullback in US Treasury yields and a softer dollar boosted risk sentiment after Washington stepped in to calm bond market jitters.
The MSCI emerging Asia equities index rose 2.1percent, set for its strongest session since August 5, while the MSCI emerging market currency index added as much as 0.4percent to an all-time high before paring some gains.
Market mood lifted after the US Treasury on Wednesday said it would double buyback sizes for long-duration debt, helping calm investors after the 30-year Treasury yield touched its highest level since 2007 earlier this week.
Lower US yields tend to support emerging market assets by easing funding pressures and reducing the appeal of dollar-denominated investments, while a weaker dollar lends support to regional currencies.
Wei Li, head of multi-asset investments at BNP Paribas Securities (China), cautioned that the rebound appeared to be a relief rally rather than the start of a sustained recovery.
“While the Treasury’s signal provides a vital policy floor for yields, the underlying structural pressures remain unresolved. Rising global debt issuance, AI-driven corporate supply, and elevated oil prices maintain inflation risks.”
Uncertainty over the Federal Reserve’s policy outlook and next week’s Jackson Hole symposium could create volatility and the rally would remain contingent on contained Treasury yields and a weak dollar unless supply-side pressures ease meaningfully or the Fed signals a clear policy pivot, Li added.
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