Asian Stocks Rally, Battered Bond Market Tries for Stability

Asian shares rallied on Monday as some semblance of calm returned to bond markets after last weeks wild ride, while progress in the huge U.S. stimulus package underpinned optimism about the global economy and sent oil prices higher.

Chinas official manufacturing PMI out over the weekend missed forecasts, but Japanese figures showed the fastest growth in two years. Investors are also counting on upbeat news from a raft of U.S. data due this week including the February payrolls report.

Helping sentiment was news deliveries of the newly approved Johnson Johnson COVID19 vaccine should start on Tuesday.

MSCIs broadest index of AsiaPacific shares outside Japan edged up 1, after shedding 3.7 last Friday.

Japans Nikkei rallied 2.1, while Chinese blue chips added 0.8.

NASDAQ futures bounced 1.2 and SP 500 futures 0.8. EUROSTOXX 50 futures and FTSE futures both rose 1.0.

Yields on U.S. 10year notes held at 1.40, from last weeks peak of 1.61. They climbed 11 basis points last week to be up 50 basis points on the year so far.

The bond moves on Friday still feel like a pause for air, rather than the catalyst for a move towards calmer waters, said Rodrigo Catril, a senior strategist at NAB.

Market participants remain nervous over the prospect of higher inflation as economies look to reopen aided by vaccine roll outs, high levels of savings along with solid fiscal and monetary support.

Analysts at BofA noted the bond bear market was now one of the most severe on record with…

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