Asian stocks drop as Fed shift reverberates; Treasury yields slide

Asian stocks dropped on Monday as investors mulled the implications of a surprise hawkish shift last week by the U.S. Federal Reserve, while the Treasury yield curve flattened further with 30-year yields dropping below 2%.

Japan’s Nikkei led declines with a 3.3% drop and dipped below 28,000 for the first time in a month, while MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1% in early trading.Chinese blue chips opened 0.4% lower, and Australia’s benchmark slid 1.8%.

Benchmark 10-year U.S. Treasury yields fell to the lowest since early March at 1.4110%, while those on 30-year bonds slid as low as 1.9990% for the first time in more than four months.The yield curve – measured by the spread between two- and 30-year yields – was the flattest since early February.

The U.S. dollar hovered near the 10-week high touched on Friday versus major peers, following its biggest weekly advance in more than a year.“The story of last week was arguably the one-way move in the USD, which morphed into a clear de-grossing through equity markets, with the ‘value’ parts of the market really getting clobbered,”