* Bond’s concerns resurface ahead of Powell’s comments later today
* Uncertainty over US bank liquidity regulation weighs on bonds
* Asian stocks drop 1.8%, Nasdaq futures hit 2-month low
* Dollar hits 7-month high against the yen, 4-month high against Swissie
* European stocks fell 0.5-0.8%
By Hideyuki Sano
TOKYO, March 4 (Reuters) – The resurgence of concerns over rising U.S. bond yields hit global equities on Thursday as investors waited to see whether Federal Reserve Chairman Jerome Powell will address concerns about the risk of ” a rapid increase in long-term borrowing costs.
The specter of rising US bond yields has also plagued low-yielding safe-haven assets, such as the yen, Swiss franc and gold.
Benchmark 10-year U.S. Treasuries rose to 1.477%, retreating to a one-year high of 1.614% set last week on bets on a strong economic recovery aided by government stimulus and progress in government programs. vaccination.
“It is not clear how the Fed wants to manage bond yields,” said Hirokazu Kabeya, chief global strategist at Daiwa Securities.
“The pace of yield increases has been much faster than most people expected and there is speculation that authorities may start to think about tightening their policy.”
Euro Stoxx 50 futures fell 0.9% while UK FTSE futures edged down 0.5%.
MSCI’s Asia-Pacific ex-Japan stocks fell 1.8% at the start of trading, while Japan’s Nikkei fell 2.2%.
Futures on E-mini S&P slipped 0.4% while futures on Nasdaq, the unequivocal leader of the post-pandemic rally, fell 0.7%, hitting a two-year low. month.
Tech stocks are vulnerable because their high valuation has been supported by expectations of a prolonged period of low interest rates.
But the market is focused on Powell, who is due to speak at a Wall Street Journal conference at 12:05 p.m. EST (5:05 p.m. GMT), in what will be his last outing before the Fed does not meet on March 16. 17.
Many Fed officials have played down the rise in Treasury yields in recent days, although Fed Governor Lael Brainard on Tuesday admitted concerns that a rapid rise in yields could dampen activity economic.
Additionally, concern is mounting over an ongoing regulatory change in a rule called the Additional Leverage Ratio, or SLR, that could make it more expensive for banks to hold bonds.
“The market will likely be volatile until this regulatory issue is resolved,” said Masahiko Loo, portfolio manager at AllianceBernstein. “There are no people who want to catch a falling knife when the market volatility is so high.”
In addition, the market will also face a dramatic increase in debt sales after rounds of stimulus measures to deal with a recession triggered by the pandemic.
The problem isn’t confined to the United States, with the UK 10-year Gilts yield rising to 0.779%, close to its 11-month high of 0.836% reached last week, after the government unveiled much higher borrowing. .
Currency investors continued to climb in dollars as they bet on the US economy outperforming its peers in the developed world in the months to come.
The dollar hit a seven-month high at 107.16 yen.
“The US dollar / yen has been on a one-sided path since early 2021,” said Joseph Capurso, head of international economics at the Commonwealth Bank of Australia.
“The improving outlook for the global economy is positive for both the US dollar / yen and the Australian dollar / yen.”
Other safe haven currencies were weak, with the Swiss franc flirting with a four-month low against the dollar and a 20-month low against the euro.
Gold hit a nine-month low of $ 1,702.8 an ounce on Wednesday and last stood at $ 1,719.
Other major currencies were little moved, with the euro holding steady at $ 1.2054.
Investor focus on a rebound in the U.S. economy was not shaken by overnight data that showed the U.S. labor market struggling in February, when private payrolls plummeted. increased less than expected.
Oil prices rose for a second straight session early Thursday, as the possibility that OPEC + producers would decide not to increase production at a key meeting later in the day was supported by a decline US fuel stocks.
US crude rose 0.6% to $ 61.64 a barrel.
(Additional reporting by Koh Gui Qing in New York; Editing by Sam Holmes, Richard Pullin and Simon Cameron-Moore)