Bond yields pause near recent peak, stocks steady ahead of Nvidia results

By Alun John and Stella Qiu

LONDON/SYDNEY, May 20 (Reuters) - Stock markets paused connected Wednesday arsenic enslaved yields steadied conscionable beneath multi-year highs amid war-driven ostentation fears, though yields stay precocious capable to unreality the outlook for Nvidia's results owed aboriginal successful the day.

The benchmark 10-year ‌U.S. Treasury output deed a 16-month precocious of 4.687% overnight, portion the 30-year output climbed to 5.198%, levels past seen successful 2007. Both ‌have since eased somewhat to 4.65% and 5.17% respectively.

Longer-dated bonds person besides sold disconnected successful Europe and Japan, pushing yields adjacent to multi-year highs arsenic investors brace for higher vigor prices - driven by ​the effectual closure of the Strait of Hormuz - to provender into broader ostentation and unit cardinal banks to rise involvement rates.

Yields edged little connected Wednesday. Germany's 10-year yield, the euro portion benchmark, fell 2 ground points to 3.17%, down from Tuesday’s 15-year high, offering immoderate enactment to European shares, up 0.2%.

Earlier, MSCI's broadest scale of Asia-Pacific shares extracurricular Japan fell 0.5%, down for a 4th consecutive session, portion U.S. stocks besides slid overnight. Futures pointed to humble U.S. gains aboriginal successful the day.

Mohit Kumar, main European ‌economist astatine Jefferies, said they had advised clients to ⁠avoid longer-dated bonds "as the existent lipid terms daze leads to higher ostentation and higher deficits."

"Even if we enactment successful this 'No War No Peace' script for an extended period, it would person a antagonistic interaction connected lipid prices and inflation. We should besides ⁠see authorities enactment for substance subsidies and an summation successful unemployment benefits arsenic the lipid daze reduces economical activity."

"Higher rates should besides commencement feeding into risky assets," helium said, utilizing a word that typically refers to stocks and different plus classes specified arsenic firm credit.

There were tentative signs of easing unit from the Gulf connected Wednesday, arsenic 2 Chinese ​oil ​tankers exited the Strait of Hormuz, shipping information showed, pursuing affirmative comments from the U.S. ​president and his deputy.

Brent futures fell 2%. Hopes that much ships ‌could walk done the cardinal strait, however, person been dashed before.

In Beijing, little than a week aft U.S. President Donald Trump's high-profile visit, Chinese person Xi Jinping held talks with Russian President Vladimir Putin, saying it was imperative to halt the warfare successful the Middle East.

BIG DAY FOR CHIPMAKERS

It is simply a pivotal time for chipmakers, with Nvidia owed to study first-quarter net aft the close. Expectations stay high, with gross forecast to leap astir 80% to astir $79 billion, according to the median estimation successful an LSEG survey of analysts.