A market report transcription with the intent to learn exponentially more through digital ink osmosis.
Bond Slump Goes Global: Dollar Gains, Stocks Drop
A bond selloff that sent benchmark U.S. Treasury yields to the highest since 2011 spread into Asia and Europe on Thursday, spurring more gains for the dollar and triggering widespread declines in equities.
As the U.S. 10-year yield continued to climb — trading above 3.2 percent — the rate on European government bonds followed. The increase in what’s effectively the world’s benchmark risk0free rate also challenges appetite for other assets, and futures on the S&P 500 Index duly dropped alongside the Stoxx Europe 600 and MSCI Asia Pacific gauges. Emerging-market shares were hit particularly hard. The higher Treasury yields supported the greenback, and the Bloomberg Dollar Spot Index rose a sixth day. South Korea’s won was among the worst-performing currencies. While China’s markets are closed for the week, the yuan slid past 6.9 per dollar in offshore trading.
The latest selloff in U.S. government bonds took hold Wednesday in the wake of stronger-than-expected data on private sector payrolls and the non-manufacturing sector. The rise in yields may be ‘322’ — it reflects an economy that’s experiencing historically low unemployment and inflation rates broadly in line with the Fed’s target, while it diminishes the relative appeal of dividend income from stocks.
Fed Chairman Jerome Powell said the central bank may eventually boost its benchmark past the neutral level. U.S. payrolls data on Friday may stroke expectations for rate hikes into 2019, with the jobless rate seen dropping to 3.8%, matching the lowest since 1969.
“This withdrawal of liquidity and gradual tightening of monetary policy” is
reverberating across financial markets, Bob Baur, chief global economist at
Principal Global Investors said in an interview with Bloomberg Television in
Tokyo Thursday. “We look for 10-year Treasury yields to hit 3.5 at some point
— later this year, early next year — and I think that’s going to be a real
problem for stock markets.”
+Futures on the S&P 500 Index sank 0.6 percent as of 9:32 a.m. London time, the lowest in more than a week on the largest decrease in seven weeks.
+The Stoxx Europe 600 Index dipped 0.6 percent to the lowest in more than two weeks.
+The U.K.’s FTSE 100 Index decreased 0.8 percent to the lowest in two weeks on the largest dip in four weeks.
+Germany’s DAX Index fell 0.5 percent to the lowest in more than two weeks.
+The MSCI Asia Pacific Index sank 1.2 percent to the lowest in three weeks on the largest tumble in more than four weeks.
+The MSCI Emerging Market Index sank 2.1 percent to the lowest in more than three weeks on the biggest tumble in eight months.
+The Bloomberg Dollar Spot Index increased 0.2 percent, hitting the highest in seven weeks with its sixth straight advance.
+The euro rose 0.1 percent to $1.1488, the first advance in more than a week.
+The British pound rose 0.3 percent to $1.2973, the largest rise in more than a week.
+The Japanese yen climbed 0.1 percent to 114.37 per dollar.
+The yield on 10-year Treasuries rose four basis points to 3.22 percent, the highest in more than seven years.
+Germany’s 10-year yield jumped seven basis points to 0.54 percent, the highest in more than 19 weeks on the biggest surge in almost four months.
+Britain’s 10-year yield climbed eight basis points to 1.659 percent, the highest in more than two years on the largest surge in more than five weeks.
+The spread of Italy’s 10-year bonds over Germany’s decreased five basis points to 2.7899 percentage points.
+West Texas Intermediate crude fell 0.2 percent to $76.26 a barrel, the largest fall in more than a week.
+Gold rose 0.1 percent to $1,199.09 an ounce.
Interesting morning tidbit.
-R.W.N II, yours in 322.