These Charts Show Global Markets Roiled as Yuan Breaches 7 Level
Korean won drops while yen, gold jump as investors seek havens.
(Bloomberg) --
The slide in China’s yuan to a record low jolted financial assets across the globe Monday.
The yuan dropped through the key 7 per dollar level in both onshore and offshore trading, after China’s central bank set its daily reference rate weaker than 6.9 per dollar for the first time since December on escalating trade tensions with the U.S. The risk-off shift intensified after reports China had asked state buyers to halt U.S. agriculture imports.
“The thought of a currency war is crossing a few traders’ minds and one of the reasons why it’s jump first into gold and ask questions later,” said Stephen Innes, managing partner with VM Markets in Singapore, in e-mailed comments.
Here’s a look at what’s moving:
Currencies
South Korea’s won rose as much as 1.7% to its highest since 2016, a move the nation’s FX authority described as “excessive, abnormal” while in Japan the yen pushed through the 106 level, its strongest since January.
Bonds
Benchmark 10-year bond futures in Japan and Australia climbed to record highs as investors sought out less risky assets. Japan’s benchmark 10-year yield tumbled to -0.2%, its lowest since July 2016, and is on track to fall below its two-year equivalent for the first time since the collapse of the Japanese economic bubble in 1991.
Treasuries
U.S. 10-year Treasuries are rallying as well, with yields falling below the 1.80% level.
Gold
Investors are also seeking refuge in other traditional havens such as gold, which climbed to its highest since 2013 on a closing basis.
Stocks
Major equity markets also sank in Asia Monday, with the Hang Seng Index retreating a fourth day to a January low amid ongoing unrest in Hong Kong. Protesters moved to shut down the city with a general strike and commute disruptions.
To contact the reporters on this story: Eric Lam in Hong Kong at elam87@bloomberg.net;Cormac Mullen in Tokyo at cmullen9@bloomberg.net
To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Cormac Mullen, Joanna Ossinger
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