HSBC Global Viewpoint
Under the Banyan Tree - Why US bond yields matter for Asia
Oct 5, 2023
The podcast discusses the impact of rising US bond yields on Asian economies, including the strength of the US economy, higher interest rates, and the consequences for Asian equity markets and currencies. It explores the benefits for exporters and banks, the offsetting growth story in countries like India, and the role of Asian central banks in mitigating the effects.
07:19
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Quick takeaways
- Rising US bond yields and higher interest rates impact Asian economies, leading to a repricing of market expectations and a strong dollar.
- The effects of rising US bond yields on Asian equity markets are mixed, benefiting exporters but limiting appetite for Asian equities.
Deep dives
Impact of Rising US Bond Yields on Asia
Rising US bond yields are causing concerns for investors and central bankers in Asia. The stronger than expected US economy, coupled with the prospect of higher interest rates for a longer period, is leading to a repricing of market expectations. This means that investors in the US are getting higher returns and keeping the dollar strong, which has implications for the rest of the world. Asian equities are particularly sensitive to this, as investors may opt to keep their money in US deposits rather than investing in Asian markets. Additionally, the stronger dollar is also a headwind for Asian investments, as the local currencies lose value, making it less attractive for investors.
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