Asian shares dipped on Thursday as tight liquidity conditions in China curbed buying for now, though improving corporate earnings, expectations of large U.S. stimulus and subsiding retail frenzy all supported risk sentiment. U.S. bond prices extended their decline, with the 30-year yield hitting its highest level since March, following stronger economic data and a push in Washington to pass a massive relief plan. MSCI’s ex-Japan Asian-Pacific index fell 0.2% while Japan’s Nikkei lost 0.4%, both snapping a three-day winning streak. Asian shares were hampered by tight liquidity in China after the country’s short-term interest rates rose again, reversing falls in the previous two days. “In Asia, risk assets have been sensitive to liquidity conditions in China as authorities have been tightening their stance in recent weeks,” said Masahiko Loo, portfolio manager at AllianceBernstein. Higher interest rates raised worries Chinese policymakers may be starting to shift to a tighter stance to rein in share prices and property markets. The lackluster start to Asian trade followed a tepid Wall Street session. The S&P 500 gained 0.10% while the Nasdaq Composite lost 0.02%. NYSE Fang+ index of leading tech giants hit an intraday record high, thanks to 7.4% gain in Google parent Alphabet following its strong earnings. Markets on the whole have calmed significantly in the past few days with measure of investors’ expectations on market volatilities such as the Cboe Volatility index slipping back to the lowest levels in over a week. As retail trading frenzy faded, stock prices of GameStop and other social media favorites subsided, while silver also steadied, having already wiped out gains made on Monday. Expectations of a large U.S. stimulus package underpin risk assets as the Democratic-controlled U.S. Congress pushed ahead with a maneuver to pass President Joe Biden’s $1.9 trillion COVID-19 relief package without Republican support. While it is unclear how much compromise the Democrats are willing to make with Republicans who are calling for a smaller package, many investors expect an additional spending of at least $1 trillion. “Either way, U.S. stimulus will push economic growth even higher after the first quarter and buoy risk market sentiment globally,” said John Vail, chief global strategist at Nikko Asset Management. U.S. bonds reacted strongly to the possibility of bigger borrowing, with the 30-year bond last up 2.2 basis points at 1.934%, a level last seen in late March. The benchmark 10-year yield rose 1.8 basis points to 1.149%, edging near 10-month high of 1.187% marked in January. In the currency market, rising U.S. yields helped the dollar against its peers, with its index staying near its highest levels in about two months. In addition, some market players say the U.S. lead in vaccinations over other nations is starting to boost the prospects of an earlier economic recovery in the United States, helping the dollar. Against the yen, the dollar changed hands at 105.04, near Tuesday’s high of 105.17, its highest level since mid-November. The euro stood at $1.20365, having hit a two-month low of $1.2004 overnight. The common currency failed to capitalise on improved sentiment in Italy, where government bond yields tumbled after former European Central Bank chief Mario Draghi accepted the task of trying to form a new government. Gold also fell 0.6% to $1,821.90 per ounce. Oil markets continued to advance as U.S. inventories hit their lowest level in almost a year. U.S. crude rose 0.75% to $56.11 per barrel and Brent gained 0.67% to $58.85. Both stood near their highest levels in about 11 months.