asian currencies and bonds continued their post-u.s.-election selloff on monday despite more positive economic data from the region, as investors piled on bets that u.s. president-elect donald trump <u+2019>s economic plans could cause the federal reserve to raise interest rates more aggressively next year. the japanese yen dropped to its weakest level in five months against the dollar even though japan<u+2019>s economy grew at a better-than-expected rate of 2.2% in the third quarter. the yen was last down 0.8% at 107.49, continuing its slide since the u.s. election outcome sparked a broad-based rise in the dollar against major currencies. the indonesian rupiah, korean won and indian rupee were among several emerging-market currencies to suffer against the u.s. dollar on monday, while china<u+2019>s central bank set the yuan at a more than seven-year low versus the greenback in mainland markets. there was a sharp move upward, meanwhile, in the yield on 10-year government bonds in malaysia and indonesia, while the yield on similar bonds in japan reached -0.012, its highest level since sept. 21 when the bank of japan announced a new policy to pin yields near zero. the dramatic recent move in asian currencies and bonds stems largely from a concurrent surge in yields on u.s. treasurys since the surprise presidential election result: on monday, the yield on 30-year treasurys rose above 3% in asian trading hours for the first time since january. investors are reasoning that mr. trump<u+2019>s plans to spend more on areas such as infrastructure could spark higher inflation, leading the fed to raise interest rates sooner than expected. as u.s. bonds have become more attractive, money that had flowed into emerging markets this year has gone into reverse, pushing up the dollar<u+2019>s value and raising yields on asian government debt. bond yields rise as their prices fall. for now, rising u.s. bond yields are outweighing investors<u+2019> positive thoughts about asian economies. beside monday<u+2019>s strong gdp numbers from japan, malaysia last week reported better-than-expected third-quarter growth, rising to 4.3% from 4% in the previous quarter. the selloff <u+201c>appears to have been driven by a general rise in investor risk aversion, rather than specific concerns about u.s. policy shifts, capital economics wrote in a note. the u.s. dollar index, which tracks the dollar<u+2019>s strength against a basket of six currencies, rose 0.5% to 99.591, its highest level since january, as yields on the u.s. 10-year treasury note rose to 2.19%. <u+201c>surging inflation expectations arising from u.s. president-elect donald trump<u+2019>s pro-growth stance have raised risks of capital outflows from the [asian] region including china,<u+201d> wrote qi gao, foreign exchange strategist for emerging asia at scotiabank. the current market trend echoes the summer of 2013, when signs that the fed was about to end quantitative-easing program caused investors to withdraw from emerging markets<u+2014>an episode dubbed the <u+201c>taper tantrum.<u+201d> some $38 billion flowed out from emerging-market stocks and bonds between june and august 2013, according to analysts at anz bank. since the u.s. election some $3.3 billion has flowed out of asian equities alone, the analysts said. asian currencies have kept sliding despite signs of more intervention from some central banks. the dollar rose by 1.1% against the malaysian ringgit despite a warning from the central bank there on sunday against speculative ringgit trading in offshore markets. the indonesian rupiah meanwhile resumed its selloff monday, following an intervention from bank indonesia on friday that had strengthened the currency. the rupiah weakened by as much as 0.9% against the u.s. dollar before last trading 0.5% weaker at 13,355.00. selling in asia<u+2019>s government bonds also gathered pace on monday, as rising u.s. treasury yields threaten to reverse a trend that has attracted yield-starved investors to emerging markets for much of the year. the risk of capital flight is most acute for countries like malaysia and indonesia, where foreign ownership of government debt is particularly high. the yield on malaysia<u+2019>s 10-year government bond rose to its highest level since january, last at 4.080% compared with 3.820% late friday. the yield on a similar bond in indonesia was last at 7.892%, compared with 7.469% late friday. if asian currencies <u+201c>continue to weaken, that triggers inflation, and yields will rise even further,<u+201d> said frances cheung, head of rates strategy, asia ex-japan, at soci<u+00e9>t<u+00e9> g<u+00e9>n<u+00e9>rale in hong kong. any perceptions of high capital outflows will trigger even more bond selling, pushing yields even higher, she added. <u+2014>kenan machado contributed to this article. write to gregor stuart hunter at gregor.hunter@wsj.com and rachel rosenthal at rachel.rosenthal@wsj.com
asian currencies fall as trump influences investors - wsj
gregor stuart hunter rachel rosenthal